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Auditing Vocab

Subject : business-skills
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Business transactions between individuals and organizations that occur without proper documents - using computers - and telecommunication networks.






2. The auditor's independent execution of procedures or controls that were originally performed as part of other entity's internal control - either manually or through the use of CAATs.






3. Audit procedures performed to test material misstatements in an account balance - transaction class - or disclosure component of the financial statements.






4. A range of acceptable amounts or a precisely determined point estimate for an estimate (eg. uncollectible receivables) - if that is a better estimate than any other amount






5. Tests to detect errors or fraud in individual transactions.






6. All the information used by the auditor in arriving at the conclusions on which the audit opinion is based - and includes the information contained in the accounting records underlying the financial statements and other information such as minutes of






7. Issued when auditors do not express an opinion on the fairness of the entity's financial statements. Can be issued for pervasive going-concern uncertainties - pervasive scope limitations - and situations in which the auditors are not independent.






8. The risk that the sample supports the conclusion that the control is not operating effectively when it actually is or that the recorded account balance is materially misstated when it is not materially misstated.






9. Sampling that uses the laws of probability to select and evaluate the results of an audit sample - thereby permitting the auditor to quantify the sampling risk for the purpose of reaching a conclusion about the population.






10. The magnitude of an omission or misstatement of accounting information that - in light of surrounding circumstances - makes it probable that the judgment of a reasonable person relying on the information would have been changed or influenced.






11. A deficiency - or combination of deficiencies - in internal control - such that there is a reasonable possibility that a material misstatememnt of the entity's financial statements will not be prevent - or detected and corrected on a timely basis.






12. An audit inquiry sent to the client's attorneys in order to obtain or corroborate information about litifation - claims - and assessments.






13. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.






14. The records of initial entries and supporting records - such as checks and records of electronic fund transfers; invoices; contracts; the general and subsidiary ledgers - journal entries - and other adjustments to the financial statements that are no






15. The deviation rate that the auditor expects to exist in the population.






16. The amount of misstatement that the auditor believes exists in the population.






17. Expressed or implied representations by management regarding recognition - measurement - presentation - and disclosure of information in the financial statements.






18. The magnitude of an omission or misstatement of accounting information that - in light of surrounding circumstances - makes it probable that the judgement of a reasonable person relying on the information would have been changed or influenced.






19. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data






20. A deficiency - or combination of deficiencies - that results in a reasonable possibility that a material misstatement of the company's annual or interim financial stsatements will not be prevented or detected on a timely basis






21. The identification - analysis - and management of risks relevant to the preparation of financial statements that are fairly presented in conformity with GAAP.






22. Tests to detect errors or fraud in individual transactions.






23. The possibility that the sample drawn is not representative of the population and that - as a result - the auditor reaches an incorrect conclusion about the reliability of the control - the account balance - or class of transactions based on the samp






24. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.






25. Computer programs that allow auditors to test computer files and databases.






26. A review of audit documentation by an additional person (normally - a partner or equivalent with the firm) who has not been involved with the audit; its purpose is to ensure that quality of the audit work and reporting is consistent with the quality






27. An organization created to provide professional accounting-related services - including auditing. Usually formed as a proprietorship or as a form of partnership.






28. The auditor's decision not to rely on the entity's controls and to audit the related financial statement account by relying more on substantive procedures.






29. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.






30. The risk that the sample supports the conclusion that the control is operating effectively when it is not or that the recorded account balance is not materially misstated when it is materially misstated.






31. A process that assess the quality of internal control performance over time.






32. The application of an audit procedure to less than 100 percent of the items within an account or class of transactions for the purpose of evaluating some characteristic of the balance or class.






33. The risk that the entity's financial statements will contain a material misstatements whether caused by error or fraud.






34. An instance where a financial statement assertion is not in accordance with the criteria against which it is audited (e.g: GAAP). Misstatements may be classified as fraud (intentional) - other illegal acts such as noncompliance with laws and regulati






35. The probability that the true but unknown measure of the characteristic of interest is within specified limits.






36. A subcommittee of the board of directors that is responsible for the financial reporting and disclosure process.






37. A confirmation request to which the recipient responds whether or not he or she agrees with the amount or information stated.






38. Financial statements prepared under regulatory - tax - cash basis - or other definitive criteria having substantial support.






39. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.






40. When a subsequent event disclosed in the financial statements occurs after the date of the report but before the issuance of the related financial statements - the auditor may use dual dating. The auditor may use the original date of the report excep






41. A deficiency - or a combination of deficiencies - in internal control that is less severe than a material weakness - yet important enough to merit attention by those charged with governance.






42. Those policies and procedures that provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition - use - or disposition of the company's assets that could have a material effect on the financial statements






43. The amount of the planning materiality that is allocated to a financial statement account.






44. A control deficiency - or combination of control deficiencies - that adversely effects the entity's ability to initate - authorize - record - process - or report external financial data reliably in accordance with GAAP such that there is more than a






45. An audit of both financial statements and internal control over financial reporting - provided by the external auditor. Required for public companies.






46. A system or code of conduct based on moral duties and obligations that indicates how an individual should behave.






47. The application of an audit procedure to less than 100 percent of the items within an account or class of transactions for the purpose of evaluating some characteristic of the balance or class.






48. Business transactions between individuals and organizations that occur without paper documents - using computers and telecommunication networks.






49. The policies and procedures that help ensure that management's directives are carried out.






50. The auditor's decision to rely on the entity's controls - test those controls - and reduce the directs test of financial statement accounts.