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






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






3. Substantive tests that concentrate on the details of items contained in the account balance and disclosures.






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






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






6. 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






7. 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.






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






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






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






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






12. 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






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






14. 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.






15. The magnitude of an omission or misstatement of accounting information that - in light of surrounding circumstances - makes it probable that the judgement of a reasonable person relying on the information would have been changed or influenced.






16. 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.






17. Processes implemented by management to achieve entity objectives. Business processes are typically organized into the following categories: revenue - purchasing. human resource management - inventory management - and financing processes






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






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






20. 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.






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






22. Examination of internal or external records or documents that are in paper form - electronic form - or other media.






23. 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.






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






25. 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






26. 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






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






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






29. Intentional misstatements that can be classified as fraudulent financial reporting and/or misappropriation of assets.






30. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.






31. 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






32. 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






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






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






35. A financial statement assertion that has a reasonable possibility of containing a misstatement or misstatements that would cause financial statements to be materially misstated.






36. 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






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






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






39. Accounting principles that are generally accepted for the preparation of financial statements in the United States. GAAP standards are currently issued primarily by the FASB - with oversight and influence by the SEC.






40. 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






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






42. 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






43. 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.






44. 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.






45. 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.






46. Violations of laws or government regulations.






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






48. 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.






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






50. 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