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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 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.
Dual-purpose tests
Attribute sampling
Reperformance
Reliance strategy
2. A risk of material misstatement that is important enough to require special audit consideration.
Monitoring of controls
Tests of controls
Significant risk
Confidence bound
3. A system or code of conduct based on moral duties and obligations that indicates how an individual should behave.
Ethics
Application controls
Risk of inccorect rejection
Public accounting firm
4. Computer programs that allow auditors to test computer files and databases.
Monetary unit sampling
Internal control over financial reporting
Computer-assisted audit techniques (CAATs)
Substantive tests of transactions
5. A letter that corroborates oral representations made to the auditor by management or by other auditors and documents the continued appropriateness of such representations.
Disclaimer of opinion
Corporate governance
Reperformance
Representation letter
6. A measure of sampling risk added and subtracted to the projected misstatement to form a confidence interval.
Confidence bound
Closest reasonable estimate
Corporate governance
Generally accepted auditing standards
7. 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.
Professional skepticism
Projected misstatement
Reliance strategy
Generally accepted auditing standards (GAAS)
8. The susceptibility of an assertion to material misstatement - assuming no related controls
Inspections of tangible assets
Inherent risk
Application controls
Allowance for sampling risk
9. An audit of both financial statements and internal control over financial reporting - provided by the external auditor. Required for public companies.
Integrated audit
Sampling unit
Accounting records
Computer-assisted audit techniques (CAATs)
10. 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.
Relevance of evidence
Nonstatistical sampling
Material weakness
Statistical sampling
11. 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.
Business risks
Ethics
Disclaimer of opinion
Audit procedures
12. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Corporate governance
Analytical procedures
Statistical sampling
Walkthrough
13. 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)
Closest reasonable estimate
Other information
Monitoring of controls
Unqualified audit report
14. The process of correcting a material weakness as part of management's assessment of the effectiveness of ICFR
Remediation
Statistical sampling
Risk of material misstatement
Audit documentation (working papers)
15. 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.
Application controls
Audit sampling
Assertions
Nonsampling risk
16. 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.
Classical variables sampling
Nonsampling risk
Sampling unit
Recalculation
17. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statement accounts.
Reliance strategy
Audit procedures
Computer-assisted audit techniques (CAATs)
Allowance for sampling risk
18. Unintentional misstatements or omissions of amounts or disclosures.
Unqualified audit report
Other comprehensive basis of accounting
Errors
Audit procedures
19. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statement accounts.
Analytical procedures
Audit sampling
Reliance strategy
Ethics
20. A letter that formalizes the contract between the auditor and the client and outlines the responsibilities of both parties.
Application controls
Positive confirmation
Engagement letter
Working papers
21. 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.
Detection risk
Blank or zero-balance confirmations
Scope limitation
Board of directors
22. 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.
Nonsampling risk
Projected misstatement
Audit procedures
Engagement risk
23. Test of transactions that both evaluate the effectiveness of controls and detect monetary errors.
Dual-purpose tests
Reliability of evidence
Analytical procedures
Nonstatistical sampling
24. The process of covering a cash shortage by applying cash from one customer's accounts receivable against another customer's accounts receivable.
Monitoring of controls
Lapping
Assertions
Corporate governance
25. 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
Management letter
Adverse opinion
Control deficiency
Nonsampling risk
26. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
Tests of details of account balances and disclosures
Tests of controls
Engagement risk
Analytical procedures
27. 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
Control activities
Material weakness
Application controls
28. Expressed or implied representations by management that are reflected in the financial statement components.
Internal control over financial reporting
Audit procedures
Assertions
Substantive tests of transactions
29. 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
Tests of details of account balances and disclosures
Significant deficiency
Positive confirmation
Analytical procedures
30. Computer programs that allow auditors to test computer files and databases.
Recalculation
Scope limitation
Control deficiency
Computer-assisted audit techniques (CAATs)
31. 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
Computer-assisted audit techniques (CAATs)
Audit evidence
Internal control
Tests of details of account balances and disclosures
32. The amount of the planning materiality that is allocated to a financial statement account.
Unqualified audit report
Generally accepted auditing standards (GAAS)
Inherent risk
Tolerable misstatement
33. 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.
Nonstatistical sampling
Internal control
Confirmation
Legal letter
34. 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
Board of directors
Tolerable deviation rate
Inspections of tangible assets
Statistical sampling
35. 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
Financial Statement Assertions
Internal control
Sampling unit
Confirmation
36. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
General controls
Scope limitation
Electronic (Internet) commerce
ateriality
37. Business transactions between individuals and organizations that occur without proper documents - using computers - and telecommunication networks.
Errors
Other comprehensive basis of accounting
Electronic (Internet) commerce
Control risk
38. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Reasonable assurance
Control risk
Nonstatistical sampling
Control deficiency
39. A violation of laws or governmental regulations.
Illegal act
Tolerable deviation rate
Substantive strategy
Dual dating
40. 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
Statistical sampling
Subsequent event
Representation letter
Material Weakness
41. Those policies and procedures that provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition - use - or disposition of the company's assets that could have a material effect on the financial statements
Safeguarding of Assets
Unqualified audit report
Generally accepted auditing standards
Classical variables sampling
42. The individual member of the population being sampled.
Sampling unit
Internal control over financial reporting
Computer-assisted audit techniques (CAATs)
Substantive tests of transactions
43. 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.
Representation letter
Audit sampling
Internal Control
Substantive strategy
44. Statements issued by the AICPA Auditing Standards Boards - considered as interpretations of the 10 GAAS statements.
Relevance of evidence
Significant deficiency
Statements on Auditing Standards
Management advisory services
45. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Reasonable assurance
Analytical procedures
Engagement letter
Application controls
46. 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.
ateriality
Internal control
Classical variables sampling
Tests of controls
47. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Analytical procedures
Board of directors
Application controls
Lapping
48. 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.
Significant deficiency
Reliance strategy
Attribute sampling
Audit committee
49. Process of watching a process or procedure being performed by others.
ateriality
Observation
Ethics
Entity-level controls
50. 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.
Application controls
Closest reasonable estimate
Statistical sampling
Scope of the audit