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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. 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
Reporting
Walkthrough
Attribute sampling
Tests of details of account balances and disclosures
2. 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
Reliance strategy
Illegal act
Audit strategy
3. Expressed or implied representations by management regarding recognition - measurement - presentation - and disclosure of information in the financial statements.
Auditing
Assertions
Reasonable assurance
Electronic (Internet) commerce
4. Sampling used to estimate the proportion of a population that possesses a specified characteristic.
Dual-purpose tests
Inquiry
Attribute sampling
Electronic (Internet) commerce
5. Physical examination of the tangible assets.
Inspections of tangible assets
Board of directors
Risk of inccorect rejection
Blank or zero-balance confirmations
6. Consulting services that may provide advice and assistance concerning an entity's organization - personnel - finances - operations - systems - or other activities
Computer-assisted audit techniques (CAATs)
Misstatement
Management advisory services
Inspections of records and documents
7. 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.
Risk of incorrect acceptance
Reliance strategy
Control environment
Ethics
8. Statements issued by the AICPA Auditing Standards Boards - considered as interpretations of the 10 GAAS statements.
Engagement letter
Monetary-unit sampling
Statements on Auditing Standards
Relevance of evidence
9. 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
Confirmation
Substantive strategy
Expected misstatement
10. 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.
Engagement letter
Nonstatistical sampling
Generally accepted auditing standards (GAAS)
Projected misstatement
11. An audit inquiry sent to the client's attorneys in order to obtain or corroborate information about litifation - claims - and assessments.
Legal letter
Internal control over financial reporting
Reperformance
Misstatement
12. 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.
Risk of incorrect acceptance
Independence
Reliance strategy
Engagement risk
13. Financial statements prepared under regulatory - tax - cash basis - or other definitive criteria having substantial support.
Observation
Integrated audit
Qualified opinion
Other comprehensive basis of accounting
14. Standards against which the quality of the auditor's performance is measured.
Confirmation
Generally accepted auditing standards
Confirmation
Substantive tests of transactions
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
Electronic data interchange
Detection risk
Entity-level controls
Negative confirmation
16. 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.
Unqualified opinion
Significant deficiency
Financial statement assertions
Fraud
17. Ten broad statements guiding the conduct of financial statement auditing.
Allowance for sampling risk
Tests of controls
Generally accepted auditing standards (GAAS)
Unqualified opinion
18. The individual member of the population being sampled.
Sampling unit
Contingent liability
Legal letter
Scope of the audit
19. 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
Significant deficiency
Audit sampling
Monetary-unit sampling
Nonstatistical sampling
20. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
Inquiry
General controls
Professional skepticism
Audit Risk
21. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
Audit sampling
Inspections of tangible assets
Tests of controls
General controls
22. A committee consisting of members of the board of directors - charged with overseeing the entity's system of internal control over financial reporting - internal and external auditors - and financial reporting process. Members typically must be indep
Reperformance
Audit committee
Inherent risk
Entity-level controls
23. Business transactions between individuals and organizations that occur without proper documents - using computers - and telecommunication networks.
Materiality
Substantive strategy
Financial Statement Assertions
Electronic (Internet) commerce
24. Expressed or implied representations by management about information that is reflected in the financial statements. The three sets of assertions related to ending account balances - transactions - and presentation and disclosure.
Financial Statement Assertions
Control risk
Dual-purpose tests
Assertions
25. Determination of the mathematical accuracy of documents or records.
Inquiry
Risk of inccorect rejection
Recalculation
Management advisory services
26. The total of the projected misstatement plus the allowance for sampling risk.
Internal Control
Upper misstatement limit
Material Weakness
Risk of incorrect rejection
27. The transmission of business transactions over telecommunication networks.
Application controls
Application controls
Risk of inccorect rejection
Electronic data interchange
28. 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
Unqualified audit report
Control objective
Dual dating
Projected misstatement
29. A financial statement assertion that has a reasonable possibility of containing a misstatement or misstatements that would cause financial statements to be materially misstated.
Control risk
General controls
Significant deficiency
Relevant Assertions
30. Test of transactions that both evaluate the effectiveness of controls and detect monetary errors.
Business risks
Dual-purpose tests
Relevant Assertions
Unqualified audit report
31. 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
Auditing
Audit evidence
Assertions
Monetary-unit sampling
32. Seeking information of knowledgeable persons - both financial and nonfinancial - throughout the entity or outside the entity.
Audit committee
Standards of the PCAOB
Inquiry
Audit risk
33. Persons elected by the stockholders of a corporation to oversee management and to direct the affairs of the corporation.
Internal control
Board of directors
General controls
Engagement risk
34. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
Entity-level controls
General controls
Reasonable assurance
Audit documentation (working papers)
35. The uncertainty that results from sampling; the difference between the expected mean of the population and the tolerable deviation or misstatement.
Attribute sampling
Control activities
Auditing
Allowance for sampling risk
36. 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.
Engagement letter
Control activities
Tests of details of account balances and disclosures
Audit sampling
37. Intentional misstatements that can be classified as fraudulent financial reporting and/or misappropriation of assets.
Electronic (Internet) commerce
Professional skepticism
Fraud
Control objective
38. A weakness in the design or operation of a control such that management or employeesm in the normal course of performing their assigned functions - fail to prevent - or detect misstatements on a timely basis.
Control deficiency
Confirmation
Other information
Audit Evidence
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.
Control activities
Assertions
Risk of incorrect rejection
Tolerable misstatement
40. The possibility that the sample drawn is not representative of the population and that - as a result - the auditor reaches an incorrect conclusion about the reliability of the control - the account balance - or class of transactions based on the samp
Sampling risk
Illegal acts
Control risk
Blank or zero-balance confirmations
41. 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
Inspections of tangible assets
Classical variables sampling
Application controls
42. Basic unit containing the elements of the population to be sampled
Lapping
Recalculation
Sampling unit
Audit Evidence
43. 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.
Material Weakness
Confirmation
Control objective
Monitoring of controlsa
44. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Attribute sampling
Computer-assisted audit techniques (CAATs)
Analytical procedures
Subsequent event
45. The relevance of audit evidence refers to its relationship to the assertion or to the objective of the control being tested.
Relevance of evidence
ateriality
Audit committee
Generally accepted accounting principles (GAAP)
46. 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.
Remediation
Scope of the audit
Substantive tests of transactions
Materiality
47. The policies and procedures that help ensure that management's directives are carried out.
Positive confirmation
Public accounting firm
Control activities
Assertions
48. A process that assess the quality of internal control performance over time.
Monitoring of controlsa
Attribute sampling
Ethics
Risk assessment
49. All the information used by the auditor in arriving at the conclusions on which the audit opinion is based; includes the information contained in the accounting records underlying the financial statements and other information
Risk of material misstatement
Tolerable misstatement
Audit Evidence
Monetary unit sampling
50. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.
Tests of details of account balances and disclosures
Audit procedures
Negative confirmation
Inquiry