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






2. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.






3. Unintentional misstatements or omissions of amounts or disclosures.






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






5. 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






6. 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.






7. The risk that the auditor may unknowingly fail to appropriately modify the opinion on materially misstated financial statements.






8. The amount of the planning materiality that is allocated to a financial statement account.






9. 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)-i.e. - a clean opinion.






10. The policies and procedures that help ensure that management's directives are carried out.






11. 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.






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






13. 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.






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






15. 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






16. 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.






17. 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






18. 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.






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






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






21. 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.






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






23. The auditor's plan for the expected conduct - organization - and staffing of the audit.






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






25. A process that assesses the quality of internal control performance over time.






26. 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.






27. The process of correcting a material weakness as part of management's assessment of the effectiveness of ICFR






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






29. The identification - analysis - and management of risks relevant to the preparation of financial statements that are fairly presented in conformity with GAAP.






30. 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






31. 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






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






33. 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.






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






35. 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.






36. Audit procedures performed to test material misstatements in an account balance - transaction class - or disclosure component of the financial statements.






37. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.






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






39. Process of watching a process or procedure being performed by others.






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






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






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






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






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






45. Expressed or implied representations by management regarding the recognitions - measurement - presentation - and disclosure of information in the financial statements and related disclosures.






46. 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.






47. Determination of the mathematical accuracy of documents or records.






48. A risk of material misstatement that is important enough to require special audit consideration.






49. Physical examination of the tangible assets.






50. Specific acts performed by the auditor in gathering evidence to determine if specific assertions are met.