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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 evaluation a direct communication from a third party in response to a request for information about a particular item affecting financial statement assertions.






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






3. 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.






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






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






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






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






8. 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






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






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






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






12. The risk that the sample supports the conclusion that the recorded account balance is materially misstated when it is not materially misstated.






13. 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






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






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






16. 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.






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






18. 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.






19. Persons elected by the stockholders of a corporation to oversee management and to direct the affairs of the corporation.






20. 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.






21. A confirmation request to which the recipient responds only if the amount or information stated is incorrect.






22. Audit procedures performed to test material misstatements in an account balance - transaction class - or disclosure component of the financial statements.






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






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






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






26. 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.






27. 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






28. 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.






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






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






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






32. 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






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






34. Expressed or implied representations by management regarding the recognitions - measurement - presentation - and disclosure of information in the financial statements and related disclosures.






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






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






37. 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.






38. 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.






39. 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.






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






41. 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






42. The transmission of business transactions over telecommunication networks.






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






44. 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






45. 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.






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






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






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






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






50. 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