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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. A weakness in the design or operation of a control such that management or employeesm in the normal course of performing their assigned functions - fail to prevent - or detect misstatements on a timely basis.






2. Ten broad statements guiding the conduct of financial statement auditing.






3. 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






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






5. The relevance of audit evidence refers to its relationship to the assertion or to the objective of the control being tested.






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






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






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






9. The auditor's decision not to tely on the entity's controls and to audit the related financial statement accounts by relying more on substantive procedures.






10. The risk that the auditor may unknowingly fail to appropriately modify his or her opinion on financial statements that are materially misstated.






11. 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






12. 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.






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






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






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






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






17. 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.






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






19. 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






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






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






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






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






24. A violation of laws or governmental regulations.






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






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






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






28. Unintentional misstatements or omissions of amounts or disclosures.






29. The risk that the auditor is exposed to financial loss or damage to his or her professional reputation from litigation - adverse publicity - or other events arising in connection wit financial statements audited and reported on.






30. 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






31. 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.






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






33. 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.






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






35. Consulting services that may provide advice and assistance concerning an entity's organization - personnel - finances - operations - systems - or other activities






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






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






38. Independent professional services that improve the quality of information - or its context - for decision makers. Encompasses attest services and financial statement audits.






39. 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.






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






42. 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.






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






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






45. 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.






46. 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






47. 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.






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






49. 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






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