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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. Substantive tests that concentrate on the details of items contained in the account balance and disclosures.
Projected misstatement
Tests of details of account balances and disclosures
Significant account or disclosure
Risk of material misstatement
2. An audit inquiry sent to the client's attorneys in order to obtain or corroborate information about litifation - claims - and assessments.
Legal letter
Tests of controls
Analytical procedures
Material Weakness
3. 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.
Material weakness
Reasonable assurance
Substantive tests of transactions
Engagement risk
4. The auditor's decision to rely on the entity's controls - test those controls - and reduce the directs test of financial statement accounts.
Allowance for sampling risk
Reliance strategy
Computer-assisted audit techniques (CAATs)
Safeguarding of Assets
5. The process of covering a cash shortage by applying cash from one customer's accounts receivable against another customer's accounts receivable.
Monetary-unit sampling
Lapping
Professional skepticism
Independence
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 -
Internal control over financial reporting
General controls
Other information
Significant account or disclosure
7. An objective for ICFR generally relates to a relevant financial statement assertion and states a criterion for evaluating whether the company's control procedures in a specific area provide reasonable assurance that a misstatement or omission in that
Other comprehensive basis of accounting
Control objective
Internal control over financial reporting
ateriality
8. 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
Assertions
Tolerable misstatement
Analytical procedures
Accounting records
9. 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.
Expected population deviation rate
Contingent liability
Illegal acts
Management advisory services
10. 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.
Audit sampling
Electronic (Internet) commerce
Information asymmetry
ositive confirmation
11. Expressed or implied representations by management that are reflected in the financial statement components
Other information
Public accounting firm
Financial statement assertions
Statistical sampling
12. Test of transactions that both evaluate the effectiveness of controls and detect monetary errors.
Audit evidence
Classical variables sampling
Observation
Dual-purpose tests
13. Expressed or implied representations by management regarding recognition - measurement - presentation - and disclosure of information in the financial statements.
Positive confirmation
Inspections of tangible assets
Sampling risk
Assertions
14. 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.
Tests of controls
Representation letter
Inspections of tangible assets
Engagement risk
15. The uncertainty that results from sampling; the difference between the expected mean of the population and the tolerable deviation or misstatement.
Scope of the audit
Upper misstatement limit
Corporate governance
Allowance for sampling risk
16. 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.
Qualified opinion
Significant deficiency
Materiality
Audit procedures
17. 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
Engagement quality review
Remediation
Disclaimer of opinion
Closest reasonable estimate
18. 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.
Confirmation
Fraud
Internal control over financial reporting
Substantive strategy
19. 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.
Inherent risk
Substantive tests of transactions
Sampling unit
Substantive strategy
20. A confirmation request to which the recipient responds whether or not he or she agrees with the amount or information stated.
Reliance strategy
Electronic (Internet) commerce
ositive confirmation
Generally accepted accounting principles (GAAP)
21. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statement accounts.
Walkthrough
Reliance strategy
Inquiry
Analytical procedures
22. Process of watching a process or procedure being performed by others.
Qualified opinion
Observation
Reasonable assurance
Control deficiency
23. 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.
Scope limitation
Internal control over financial reporting
Analytical procedures
Materiality
24. The deviation rate that the auditor expects to exist in the population.
Audit evidence
Audit procedures
Scope limitation
Expected population deviation rate
25. Standards against which the quality of the auditor's performance is measured.
Other information
Generally accepted auditing standards
Inquiry
Internal control
26. The amount of the planning materiality that is allocated to a financial statement account.
Substantive tests of transactions
Tolerable misstatement
Inquiry
Confirmation
27. 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
Application controls
Statistical sampling
Audit procedures
ositive confirmation
28. Violations of laws or government regulations.
Illegal acts
Audit sampling
Legal letter
Detection risk
29. The auditor's independent execution of procedures or controls that were originally performed as part of other entity's internal control - either manually or through the use of CAATs.
Scope of the audit
Audit Risk
Control risk
Reperformance
30. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
Reasonable assurance
General controls
Electronic (Internet) commerce
Sampling unit
31. A confirmation request to which the recipient responds only if the amount or information stated is incorrect.
Negative confirmation
Analytical procedures
Tests of details of account balances and disclosures
Disclaimer of opinion
32. A state of objectivity in fact and in appearance - including the absence of any significant conflicts of interest.
Board of directors
Control risk
Management advisory services
Independence
33. 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
Other information
Reliance strategy
Relevant Assertions
Classical variables sampling
34. All the information used by the auditor in arriving at the conclusions on which the audit opinion is based - and includes the information contained in the accounting records underlying the financial statements and other information such as minutes of
Audit evidence
Assurance Services
Scope limitation
Nonsampling risk
35. Specific acts performed by the auditor in gathering evidence to determine if specific assertions are met.
Tests of details of account balances and disclosures
Audit procedures
Tests of controls
Reasonable assurance
36. Examination of internal or external records or documents that are in paper form - electronic form - or other media.
Public accounting firm
Substantive strategy
Inspections of records and documents
Tolerable deviation rate
37. The susceptibility of an assertion to material misstatement - assuming no related controls
Inherent risk
Standards of the PCAOB
Analytical procedures
Inspections of tangible assets
38. Controls that have a pervasive effect on the entity's system of internal control such as controls related to the control environment; controls over management override; the company's risk assessment process; centralized processing and controls - incl
Integrated audit
Expected misstatement
Material Weakness
Entity-level controls
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.
Working papers
Auditing
Computer-assisted audit techniques (CAATs)
Tolerable deviation rate
40. The risk that the auditor may unknowingly fail to appropriately modify the opinion on materially misstated financial statements.
Analytical procedures
Reliance strategy
Audit risk
Significant account or disclosure
41. The tone of an organization - which reflects the overall attitude - awareness - and actions of the board of directors - management - and owners influencing the control consciousness of its people.
Assertions
Entity-level controls
Control environment
Computer-assisted audit techniques (CAATs)
42. A violation of laws or governmental regulations.
Sampling unit
Engagement quality review
Illegal act
Monitoring of controls
43. The amount of the planning materiality that is allocated to a financial statement account.
Audit committee
Unqualified opinion
Reliance strategy
Tolerable misstatement
44. 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
Significant account or disclosure
Nonstatistical sampling
Reasonable assurance
Board of directors
45. The use of normal distribution theory to estimate the dollar amount of misstatement for a class of transactions or an account balance.
Walkthrough
Reliability of evidence
Assertions
Classical variables sampling
46. 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
Blank or zero-balance confirmations
Computer-assisted audit techniques (CAATs)
Audit documentation (working papers)
Reliance strategy
47. 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.
Inherent risk
Adverse opinion
Disclaimer of opinion
Errors
48. 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
Sampling unit
Misstatement
Tests of controls
Risk of material misstatement
49. Audit procedures performed to test material misstatements in an account balance - transaction class - or disclosure component of the financial statements.
Electronic data interchange
Substantive procedures
Inquiry
Application controls
50. A letter that corroborates oral representations made to the auditor by management or by other auditors and documents the continued appropriateness of such representations.
Representation letter
Business risks
Substantive strategy
General controls