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Auditing Vocab

Subject : business-skills
Instructions:
  • Answer 50 questions in 15 minutes.
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  • 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. Computer programs that allow auditors to test computer files and databases.






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






3. 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






4. 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.






5. Seeking information of knowledgeable persons - both financial and nonfinancial - throughout the entity or outside the entity.






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






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






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






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






10. 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.






11. 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.






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






13. 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.






14. A financial statement assertion that has a reasonable possibility of containing a misstatement or misstatements that would cause financial statements to be materially misstated.






15. A service when a practitioner is engaged to issue or does issue a report on a subject matter - or an assertion about subject matter - that is the responsibility of another party. Encompasses financial statement audits.






16. 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






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






18. 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






19. A committee consisting of members of the board of directors - charged with overseeing the entity's system of internal control over financial reporting - internal and external auditors - and financial reporting process. Members typically must be indep






20. The uncertainty that results from sampling; the difference between the expected mean of the population and the tolerable deviation or misstatement.






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






22. An account or disclosure is significant if there is a reasonable possibility that the account or disclosure could contain a misstatement that - individually or when aggregated with others - has a material effect on the financial statements - consider






23. Specific acts performed by the auditor in gathering evidence to determine if specific assertions are met.






24. 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






25. 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






26. 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






27. A violation of laws or governmental regulations.






28. 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.






29. The use of normal distribution theory to estimate the dollar amount of misstatement for a class of transactions or an account balance.






30. Unintentional misstatements or omissions of amounts or disclosures.






31. Substantive tests that concentrate on the details of items contained in the account balance and disclosures.






32. 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.






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






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






35. Determination of the mathematical accuracy of documents or records.






36. 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.






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






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






39. The tone of an organization - which reflects the overall attitude - awareness - and actions of the board of directors - management - and owners influencing the control consciousness of its people.






40. 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.






41. 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.






42. A term that implies some risk that a material misstatement could be present in the financial statements without the auditor detecting it - even when the auditor has exercised due care.






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






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






45. 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






46. The use of normal distribution theory to estimate the dollar amount of misstatement for a class of transactions or an account balance.






47. Specific acts performed by the auditor in gathering evidence to determine if specific assertations are being met.






48. A transaction being traced by an auditor from origination through the entity's information system until it is reflected in the entity's financial reports; it encompasses the entire process of initiating - authorizing - recording - processing - and re






49. Risks resulting from significant conditions - events - circumstances - and actions or inactions that could adversely affect management's ability to execute its strategies and to achieve its objectives - or through the setting of inappropriate objecti






50. Existing condition or set of circumstances involving uncertainty about a possible loss that will ultimately be resolved when some future event occurs or fails to occur.







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