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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. Risks resulting from significant conditions - events - circumstances - and actions or inactions that could adversely affect management's ability to execute its strategies and to achieve its objectives - or through the setting of inappropriate objecti






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






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






4. An attitude that includes a questioning mind and a critical assessment of an audit evidence. The auditor should not assume that management is either honest or dishonest.






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






6. A process designed by - or under the supervision of - the company's principal executive and principal financial officers - or persons performing similar functions - and effected by the company's board of directors - management - and other personnel -






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






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






9. 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






10. 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.






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






12. 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.






13. 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.






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






15. 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






16. The auditor's principal record of the work performed and the basis for the conclusions in the auditor's report. It also facilitates the planning - performance - and supervision of the engagement and provides the basis for the review of the quality of






17. Physical examination of the tangible assets.






18. 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.






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






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






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






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






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






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






25. A violation of laws or governmental regulations.






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






27. 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)






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






29. The process of covering a cash shortage by applying cash from one customer's accounts receivable against another customer's accounts receivable.






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






31. 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






32. Specific acts performed as the auditor gathers evidence to determine if specific audit objectives are being met.






33. The transmission of business transactions over telecommunication networks.






34. 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.






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






36. A transaction being traced by an auditor from origination through the entity's information system until it is reflected in the entity's financial reports; it encompasses the entire process of initiating - authorizing - recording - processing - and re






37. 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.






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






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






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






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






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






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






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






45. 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.






46. Violations of laws or government regulations.






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






48. The risk that the auditor will not detect a material misstatement that exists in the financial statements






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






50. 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.