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






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






3. The risk that the entity's financial statements will contain a material misstatements whether caused by error or fraud.






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






5. 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.






6. 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






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






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






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






10. 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






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






12. 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.






13. The individual member of the population being sampled.






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. 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






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






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






18. 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.






19. Physical examination of the tangible assets.






20. 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.






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






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






23. 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






24. Basic unit containing the elements of the population to be sampled






25. A violation of laws or governmental regulations.






26. 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






27. 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.






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






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






30. 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.






31. 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.






32. 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.






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






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






35. Standards against which the quality of the auditor's performance is measured.






36. Test to detect errors or fraud in individual transactions.






37. 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






38. 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






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






40. 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.






41. 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






42. 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.






43. Audit evidence that includes minutes of meetings; confirmations from third parties; industry analysts' reports; comparable data about competitors (benchmarking); controls manuals; information obtained by the auditor from such audit procedures as inqu






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






45. 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)






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






47. Attribute sampling techniques used to estimate the dollar amount of misstatement for a class of transactions or an account balance.






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






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






50. A confirmation request on which the recipient fills in the amount or furnishes the information requested.