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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 process of obtaining and evaluating direct communication from a third party in response to a request for information about a particular item affecting financial statement assertions.






2. Test to detect errors or fraud in individual transactions.






3. All the information used by the auditor in arriving at the conclusions on which the audit opinion is based; includes the information contained in the accounting records underlying the financial statements and other information






4. A deficiency in internal control exists when the design or operation of a control does not allow management or employees - in the normal course of performing their assigned functions - to prevent - or detect and correct misstatements on a timely basi






5. The total of the projected misstatement plus the allowance for sampling risk.






6. 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.






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






8. Papers that document the evidence gathered by auditors to show the work they have done - the methods and procedures they have followed - and the conclusions they have developed in an audit of financial statements or other type of engagement.






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






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






11. The process of obtaining and evaluation a direct communication from a third party in response to a request for information about a particular item affecting financial statement assertions.






12. The concept that the manager generally has more information about the true financial position and results of operations of the entity than the absentee owner does.






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






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






15. The transmission of business transactions over telecommunication networks.






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






17. A process designed by - or under the supervision of - the company's principal executive and principal financial officers - or persons performing similar functions - and effected by the company's board of directors - management - and other personnel -






18. The auditor's opinion that the financial statements present fairly - in all material respects - in accordance with generally accepted accounting principles (or other comprehensive basis of accounting)-i.e. - a clean opinion.






19. 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






20. The auditor's opinion that the financial statements do not present fairly in accordance with generally accepted accounting principles (or other comprehensive basis of accounting) due to a pervasively material misstatement.






21. Accounting principles that are generally accepted for the preparation of financial statements in the United States. GAAP standards are currently issued primarily by the FASB - with oversight and influence by the SEC.






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






23. Audit evidence that includes minutes of meetings; confirmations from third parties; industry analysts' reports; comparable data about competitors (benchmarking); controls manuals; information obtained by the auditor from such audit procedures as inqu






24. Attribute-sampling techniques used to estimaed the dollar amount of misstatement for a class of transactions or an account balance.






25. Basic unit containing the elements of the population to be sampled






26. 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






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






28. 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






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






30. 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.






31. Intentional misstatements that can be classified as fraudulent financial reporting and/or misappropriation of assets.






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






33. The auditor's principal record of the work performed and the basis for the conclusions in the auditor's report. It also facilitates the planning - performance - and supervision of the engagement and provides the basis for the review of the quality of






34. The diagnosticity of evidence; that is whether the type of evidence can be relied on to signal the true state of the assertion.






35. 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.






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






37. 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.






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






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






40. Expressed or implied representations by management about information that is reflected in the financial statements. The three sets of assertions related to ending account balances - transactions - and presentation and disclosure.






41. The extrapolation of sample results to the population; represents the auditors 'best estimate' of the misstatement in the sampling population






42. Examination of internal or external records or documents that are in paper form - electronic form - or other media.






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






44. The process of obtaining and evaluating direct communication from a third party in response to a request for information about a particular item affecting financial statement assertions.






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






46. Specific acts performed as the auditor gathers evidence to determine if specific audit objectives are being met.






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






48. Sampling used to estimate the proportion of a population that possesses a specified characteristic.






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






50. A confirmation request on which the recipient fills in the amount or furnishes the information requested.