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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. 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.






2. A risk of material misstatement that is important enough to require special audit consideration.






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






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






5. A letter that corroborates oral representations made to the auditor by management or by other auditors and documents the continued appropriateness of such representations.






6. A measure of sampling risk added and subtracted to the projected misstatement to form a confidence interval.






7. An attitude that includes a questioning mind and a critical assessment of an audit evidence. The auditor should not assume that management is either honest or dishonest.






8. The susceptibility of an assertion to material misstatement - assuming no related controls






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






10. 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.






11. 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.






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






13. A 'clean' audit report - indicating the auditor's opinion that a client's financial statements are fairly presented in accordance with agreed-upon criteria (eg. GAAP)






14. The process of correcting a material weakness as part of management's assessment of the effectiveness of ICFR






15. 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.






16. The possibility that the auditor may use inappropriate audit procedures - fail to detect a misstatement when applying an audit procedure - or misinterpret an audit result.






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






18. Unintentional misstatements or omissions of amounts or disclosures.






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






20. A letter that formalizes the contract between the auditor and the client and outlines the responsibilities of both parties.






21. A lack of evidence that may preclude the auditor from issuing a clean opinion - usually resulting from an inability to conduct an audit procedure considered necessary.






22. The possibility that the auditor may use inappropriate audit procedures - fail to detect a misstatement when applying an audit procedure - or misinterpret an audit result.






23. Test of transactions that both evaluate the effectiveness of controls and detect monetary errors.






24. The process of covering a cash shortage by applying cash from one customer's accounts receivable against another customer's accounts receivable.






25. A management letter is a report to management containing the auditors' recommendations for correcting any deficiencies disclosed by the auditors' consideration of internal control. The management letter also provides recommendations on where the comp






26. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.






27. Standards regarding the conduct of financial statement auditing for public companies. Currently - consist primarily of standards and statements established by the AICPA's Auditing Standards Board - as these statements and standards were adopted by th






28. Expressed or implied representations by management that are reflected in the financial statement components.






29. 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






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






31. 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






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






33. Audit sampling that relies on the auditor's judgment to dewtermine the sample size - select the sample - and/or evaluate the results for the purpose of reaching a conclusion about the population.






34. 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






35. The method by which an entity's board of directors - management - and other personnel provide reasonable assurance about the achievement of objectives in the following categories: (1) reliability of financial reporting - (2) effectiveness and efficie






36. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.






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






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






39. A violation of laws or governmental regulations.






40. 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






41. 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






42. The individual member of the population being sampled.






43. 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.






44. Statements issued by the AICPA Auditing Standards Boards - considered as interpretations of the 10 GAAS statements.






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






46. 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.






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






48. 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.






49. Process of watching a process or procedure being performed by others.






50. Refers to the nature - timing - and extent of audit procedures - when nature refers to the type of evidence; timing refers to when the evidence will be gathered; and extent refers to how much of the type of evidence will be evaluated.