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






2. The maximum deviation rate from a prescribed control that the auditor is willing to accept without altering the planned assessed level of control risk.






3. The concept that an audit done in accordance with auditing standards may fail to detect a material misstatement in a client's financial statements. In an auditing context this term has been defined to mean a high - but not absolute level of assurance






4. 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






5. 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.






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






7. An event occurring between the balance sheet date and the audit report release date - Type I - Type II






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






9. 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.






10. Physical examination of the tangible assets.






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






12. 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






13. 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.






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. 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.






16. A process that assesses the quality of internal control performance over time.






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






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. 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.






20. 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.






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






22. The end product of the auditor's work indicating the auditing standards followed - and expressing an opinion as to whether an entity's financial statements are fairly presented in accordance with agreed-upon criteria (eg. GAAP)






23. Unintentional misstatements or omissions of amounts or disclosures.






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






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






26. 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.






27. A state of objectivity in fact and in appearance - including the absence of any significant conflicts of interest.






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






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






30. 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






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






32. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.






33. 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






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






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






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






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






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






39. 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.






40. 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






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






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






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






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






45. A systematic process of (1) objectively obtaining an evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and (2) communicating the resu






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






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






48. 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.






49. 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






50. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.