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Test your basic knowledge |
Auditing Vocab
Start Test
Study First
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 amount of the planning materiality that is allocated to a financial statement account.
Tolerable misstatement
Legal letter
Audit procedures
Significant account or disclosure
2. 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.
Tests of details of account balances and disclosures
Audit procedures
Materiality
Internal control over financial reporting
3. The oversight mechanisms in place to help ensure the proper stewardship over an entity's assets. Management and the board of directors play primary roles - and the independent auditor plays a key facilitating role.
Control activities
Projected misstatement
Internal Control
Corporate governance
4. Determination of the mathematical accuracy of documents or records.
Significant deficiency
Reliance strategy
Recalculation
Professional skepticism
5. The risk that the auditor will not detect a material misstatement that exists in the financial statements
Business processes
Analytical procedures
Detection risk
Blank or zero-balance confirmations
6. Unintentional misstatements or omissions of amounts or disclosures.
Monitoring of controlsa
Classical variables sampling
Errors
Audit committee
7. The policies and procedures that help ensure that management's directives are carried out.
Reliability of evidence
Control activities
Auditing
Analytical procedures
8. The uncertainty that results from sampling; the difference between the expected mean of the population and the tolerable deviation or misstatement.
Reasonable assurance
Walkthrough
Allowance for sampling risk
Generally accepted accounting principles (GAAP)
9. Tests to detect errors or fraud in individual transactions.
Tests of details of account balances and disclosures
Risk of inccorect rejection
Substantive tests of transactions
Tests of controls
10. 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.
Working papers
Other information
Management advisory services
Scope of the audit
11. Financial statements prepared under regulatory - tax - cash basis - or other definitive criteria having substantial support.
Audit committee
Other comprehensive basis of accounting
Computer-assisted audit techniques (CAATs)
Unqualified audit report
12. 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
Unqualified opinion
Expected population deviation rate
Significant deficiency
Analytical procedures
13. 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
Relevance of evidence
Positive confirmation
Internal control
Dual-purpose tests
14. Controls that related to the overall information processing environment and have a pervasive effect on the entity's computer operations
Reliance strategy
Independence
General controls
Business risks
15. The process of covering a cash shortage by applying cash from one customer's accounts receivable against another customer's accounts receivable.
Risk of material misstatement
Fraud
Lapping
Projected misstatement
16. 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.
Analytical procedures
Audit procedures
Tests of controls
Substantive strategy
17. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data
Analytical procedures
Relevance of evidence
Nonsampling risk
Scope limitation
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.
Assertions
Accounting records
Unqualified opinion
General controls
19. The process of correcting a material weakness as part of management's assessment of the effectiveness of ICFR
Significant deficiency
Confidence bound
Control risk
Remediation
20. The transmission of business transactions over telecommunication networks.
Substantive tests of transactions
ateriality
Tests of details of account balances and disclosures
Electronic data interchange
21. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
Confirmation
Representation letter
Tests of controls
Sampling unit
22. 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
Standards of the PCAOB
Risk of inccorect rejection
Internal control
Risk of incorrect acceptance
23. The total of the projected misstatement plus the allowance for sampling risk.
Control risk
Control deficiency
Upper misstatement limit
Risk of incorrect acceptance
24. The use of normal distribution theory to estimate the dollar amount of misstatement for a class of transactions or an account balance.
Nonstatistical sampling
Scope of the audit
Control deficiency
Classical variables sampling
25. 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.
Other information
Positive confirmation
Sampling unit
Adverse opinion
26. 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
Auditing
Closest reasonable estimate
Substantive strategy
Assertions
27. Physical examination of the tangible assets.
Illegal acts
Inspections of tangible assets
Observation
Ethics
28. 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.
Internal Control
Confirmation
Nonstatistical sampling
Control deficiency
29. 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
Reliance strategy
Audit evidence
Misstatement
Substantive strategy
30. A deficiency - or combination of deficiencies - in internal control - such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented - or detected and corrected - on a timely basis.
Risk assessment
Analytical procedures
Other comprehensive basis of accounting
Material weakness
31. Independent professional services that improve the quality of information - or its context - for decision makers. Encompasses attest services and financial statement audits.
Assurance Services
Audit risk
Reporting
Representation letter
32. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statement accounts.
Subsequent event
Substantive strategy
Reliance strategy
Control risk
33. 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
Audit sampling
Unqualified audit report
Audit Evidence
Monitoring of controls
34. Attribute sampling techniques used to estimate the dollar amount of misstatement for a class of transactions or an account balance.
Monetary-unit sampling
Relevant Assertions
Tests of controls
Sampling unit
35. An audit inquiry sent to the client's attorneys in order to obtain or corroborate information about litifation - claims - and assessments.
Positive confirmation
Legal letter
Information asymmetry
Reliability of evidence
36. 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
Assertions
Risk of incorrect acceptance
Generally accepted accounting principles (GAAP)
Audit committee
37. 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.
Contingent liability
Confirmation
Application controls
Analytical procedures
38. 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
Sampling risk
Business processes
Risk assessment
Reliance strategy
39. 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.
Assertions
Audit risk
Engagement risk
ateriality
40. An audit of both financial statements and internal control over financial reporting - provided by the external auditor. Required for public companies.
Integrated audit
Risk of inccorect rejection
Substantive strategy
Application controls
41. Expressed or implied representations by management regarding the recognitions - measurement - presentation - and disclosure of information in the financial statements and related disclosures.
Audit procedures
Representation letter
Application controls
Assertions
42. A risk of material misstatement that is important enough to require special audit consideration.
Illegal acts
Reporting
Significant risk
Significant deficiency
43. The method by which an entity's boardof 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 efficien
Observation
Internal Control
Audit procedures
Analytical procedures
44. 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.
Audit strategy
Significant deficiency
Attest
Statistical sampling
45. Test to detect errors or fraud in individual transactions.
Substantive tests of transactions
Legal letter
Classical variables sampling
Financial Statement Assertions
46. The policies and procedures that help ensure that management's directives are carried out.
Monetary unit sampling
Risk of inccorect rejection
Control activities
Audit procedures
47. A deficiency - or combination of deficiencies - in internal control - such that there is a reasonable possibility that a material misstatememnt of the entity's financial statements will not be prevent - or detected and corrected on a timely basis.
Statements on Auditing Standards
Reliance strategy
Material weakness
Statistical sampling
48. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statement accounts.
Attest
Electronic data interchange
Reliance strategy
Illegal acts
49. A confirmation request to which the recipient responds whether or not he or she agrees with the amount or information stated.
Positive confirmation
Management letter
Substantive tests of transactions
Relevance of evidence
50. The risk that the entity's financial statements will contain a material misstatements whether caused by error or fraud.
Observation
Ethics
Other comprehensive basis of accounting
Risk of material misstatement