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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 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.
Information asymmetry
Assertions
Inherent risk
Reliance strategy
2. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
Audit procedures
Allowance for sampling risk
Tests of controls
Reporting
3. 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
Ethics
Monetary unit sampling
Other information
Computer-assisted audit techniques (CAATs)
4. 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 -
Significant deficiency
Sampling unit
Scope limitation
Internal control over financial reporting
5. Expressed or implied representations by management that are reflected in the financial statement components.
Analytical procedures
Business risks
Financial statement assertions
Assertions
6. A confirmation request on which the recipient fills in the amount or furnishes the information requested.
Audit documentation (working papers)
Upper misstatement limit
Blank or zero-balance confirmations
Dual-purpose tests
7. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Analytical procedures
Tolerable misstatement
Audit committee
Tests of details of account balances and disclosures
8. Unintentional misstatements or omissions of amounts or disclosures.
Corporate governance
Substantive tests of transactions
Errors
Independence
9. Test to detect errors or fraud in individual transactions.
Substantive tests of transactions
Application controls
Analytical procedures
Risk of incorrect acceptance
10. 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
Unqualified opinion
Risk of incorrect rejection
Control deficiency
Reporting
11. Tests to detect errors or fraud in individual transactions.
Audit Evidence
Qualified opinion
Independence
Substantive tests of transactions
12. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Application controls
Reliance strategy
Classical variables sampling
Relevance of evidence
13. 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.
Nonstatistical sampling
Control deficiency
Risk of incorrect acceptance
Substantive strategy
14. A system or code of conduct based on moral duties and obligations that indicates how an individual should behave.
Inquiry
Expected population deviation rate
Ethics
Audit risk
15. 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
Risk assessment
Engagement letter
Entity-level controls
Sampling unit
16. The process of correcting a material weakness as part of management's assessment of the effectiveness of ICFR
Negative confirmation
Internal Control
Analytical procedures
Remediation
17. Basic unit containing the elements of the population to be sampled
Sampling unit
Independence
Control environment
Expected misstatement
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.
Independence
Unqualified audit report
Confirmation
Computer-assisted audit techniques (CAATs)
19. Intentional misstatements that can be classified as fraudulent financial reporting and/or misappropriation of assets.
ositive confirmation
Inquiry
Fraud
Risk of material misstatement
20. The risk that the sample supports the conclusion that the recorded account balance is materially misstated when it is not materially misstated.
Risk of inccorect rejection
Control environment
General controls
Reliability of evidence
21. The identification - analysis - and management of risks relevant to the preparation of financial statements that are fairly presented in conformity with GAAP.
Nonstatistical sampling
Risk assessment
Application controls
Inspections of tangible assets
22. 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
Standards of the PCAOB
Control objective
Audit committee
Audit Risk
23. The policies and procedures that help ensure that management's directives are carried out.
Control activities
Control risk
Auditing
Risk of incorrect rejection
24. The policies and procedures that help ensure that management's directives are carried out.
Control activities
Monetary-unit sampling
Sampling risk
Control deficiency
25. Determination of the mathematical accuracy of documents or records.
Recalculation
Audit sampling
Analytical procedures
Inherent risk
26. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Entity-level controls
Analytical procedures
Significant deficiency
Expected misstatement
27. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
General controls
Board of directors
Inherent risk
Allowance for sampling risk
28. 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) - except for a material misstatement that does no
Qualified opinion
Lapping
ateriality
Significant deficiency
29. A 'clean' audit report - indicating the auditor's opinion that a client's financial statements are fairly presented in accordance with agreed-upon criteria (eg. GAAP)
Unqualified audit report
Nonsampling risk
Analytical procedures
Assertions
30. 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
General controls
Material weakness
Audit procedures
31. A process that assesses the quality of internal control performance over time.
Reporting
Substantive procedures
Monitoring of controls
Unqualified audit report
32. 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
Confirmation
Subsequent event
Auditing
Sampling risk
33. Computer programs that allow auditors to test computer files and databases.
Tolerable misstatement
Computer-assisted audit techniques (CAATs)
Significant deficiency
Expected population deviation rate
34. Sampling used to estimate the proportion of a population that possesses a specified characteristic.
Attribute sampling
Monitoring of controls
Substantive tests of transactions
Control risk
35. A risk of material misstatement that is important enough to require special audit consideration.
Reliance strategy
Other information
Significant risk
ateriality
36. A service when a practitioner is engaged to issue or does issue a report on a subject matter - or an assertion about subject matter - that is the responsibility of another party. Encompasses financial statement audits.
Blank or zero-balance confirmations
Attest
Control deficiency
Sampling risk
37. 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.
Disclaimer of opinion
Unqualified audit report
Integrated audit
Material weakness
38. 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.
Substantive strategy
Significant deficiency
Sampling unit
Qualified opinion
39. 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.
Engagement quality review
Risk of incorrect rejection
Statements on Auditing Standards
Risk of incorrect acceptance
40. The diagnosticity of evidence; that is whether the type of evidence can be relied on to signal the true state of the assertion.
Business risks
Projected misstatement
Reliability of evidence
Other information
41. 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.
Audit procedures
Audit sampling
Accounting records
Positive confirmation
42. 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.
Errors
Integrated audit
Qualified opinion
Adverse opinion
43. A process that assess the quality of internal control performance over time.
Dual dating
Management advisory services
Monitoring of controlsa
Nonsampling risk
44. The amount of the planning materiality that is allocated to a financial statement account.
Negative confirmation
Tolerable misstatement
Control environment
Audit strategy
45. Expressed or implied representations by management regarding the recognitions - measurement - presentation - and disclosure of information in the financial statements and related disclosures.
Business risks
Nonsampling risk
Subsequent event
Assertions
46. 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.
Confirmation
Expected population deviation rate
Materiality
Corporate governance
47. 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.
Reasonable assurance
Control activities
Tolerable misstatement
Corporate governance
48. 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
Statements on Auditing Standards
Misstatement
Sampling unit
49. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Recalculation
Risk of incorrect acceptance
Control risk
Tolerable misstatement
50. A management letter is a report to management containing the auditors' recommendations for correcting any deficiencies disclosed by the auditors' consideration of internal control. The management letter also provides recommendations on where the comp
Classical variables sampling
Risk of incorrect acceptance
Management letter
Audit Risk