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Test your basic knowledge |
Auditing Vocab
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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 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
Illegal act
Reperformance
Audit committee
Closest reasonable estimate
2. 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.
Business processes
Significant deficiency
Analytical procedures
Audit committee
3. 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.
Nonsampling risk
Statistical sampling
Substantive tests of transactions
Audit Evidence
4. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
Other information
Generally accepted auditing standards
Control risk
Tests of controls
5. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Blank or zero-balance confirmations
Application controls
Qualified opinion
Recalculation
6. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Control risk
Significant risk
Inquiry
Statistical sampling
7. Violations of laws or government regulations.
Significant deficiency
Illegal acts
Control risk
Statistical sampling
8. Business transactions between individuals and organizations that occur without paper documents - using computers and telecommunication networks.
Tests of details of account balances and disclosures
Reporting
Risk of inccorect rejection
Electronic (Internet) commerce
9. The tone of an organization - which reflects the overall attitude - awareness - and actions of the board of directors - management - and owners influencing the control consciousness of its people.
Substantive tests of transactions
Control environment
Risk of material misstatement
Illegal act
10. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
Electronic (Internet) commerce
General controls
Sampling unit
Computer-assisted audit techniques (CAATs)
11. The policies and procedures that help ensure that management's directives are carried out.
Audit procedures
Application controls
Control activities
Material weakness
12. Intentional misstatements that can be classified as fraudulent financial reporting and/or misappropriation of assets.
Control risk
Independence
Integrated audit
Fraud
13. The use of normal distribution theory to estimate the dollar amount of misstatement for a class of transactions or an account balance.
Audit procedures
Audit procedures
Risk of incorrect acceptance
Classical variables sampling
14. 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.
Substantive strategy
Nonstatistical sampling
Significant deficiency
Subsequent event
15. 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.
Engagement letter
Generally accepted auditing standards (GAAS)
Reporting
Confirmation
16. 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
Financial statement assertions
Errors
Tolerable deviation rate
17. The method by which an entity's boardof 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 efficien
Tests of details of account balances and disclosures
Inspections of tangible assets
Control environment
Internal Control
18. A process that assesses the quality of internal control performance over time.
Monitoring of controls
Risk of material misstatement
Positive confirmation
Computer-assisted audit techniques (CAATs)
19. The risk that the auditor will not detect a material misstatement that exists in the financial statements
Detection risk
Representation letter
Working papers
Generally accepted auditing standards
20. Expressed or implied representations by management regarding the recognitions - measurement - presentation - and disclosure of information in the financial statements and related disclosures.
Application controls
Computer-assisted audit techniques (CAATs)
Assertions
Tests of details of account balances and disclosures
21. 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
Analytical procedures
Inspections of tangible assets
Illegal acts
Control objective
22. A process that assess the quality of internal control performance over time.
Tests of details of account balances and disclosures
Monitoring of controlsa
Audit committee
Expected misstatement
23. A system or code of conduct based on moral duties and obligations that indicates how an individual should behave.
Allowance for sampling risk
ositive confirmation
Ethics
Upper misstatement limit
24. 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
Financial Statement Assertions
Sampling risk
Internal Control
Audit evidence
25. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statement accounts.
Reliability of evidence
Reliance strategy
Reperformance
Legal letter
26. The risk that the auditor may unknowingly fail to appropriately modify the opinion on materially misstated financial statements.
Substantive tests of transactions
Audit risk
Unqualified audit report
Assertions
27. A confirmation request to which the recipient responds only if the amount or information stated is incorrect.
Control risk
Inherent risk
Reasonable assurance
Negative confirmation
28. A review of audit documentation by an additional person (normally - a partner or equivalent with the firm) who has not been involved with the audit; its purpose is to ensure that quality of the audit work and reporting is consistent with the quality
Engagement quality review
Accounting records
Audit Evidence
Risk of incorrect acceptance
29. Business transactions between individuals and organizations that occur without proper documents - using computers - and telecommunication networks.
Electronic (Internet) commerce
Computer-assisted audit techniques (CAATs)
Safeguarding of Assets
Assertions
30. 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
Misstatement
Significant risk
Ethics
Entity-level controls
31. 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
Internal control
Professional skepticism
Relevance of evidence
Information asymmetry
32. Expressed or implied representations by management regarding recognition - measurement - presentation - and disclosure of information in the financial statements.
Significant account or disclosure
Assertions
Management advisory services
Management letter
33. 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
Analytical procedures
Audit Evidence
Other comprehensive basis of accounting
Inspections of tangible assets
34. 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.
Significant deficiency
Other comprehensive basis of accounting
Audit Risk
Reasonable assurance
35. 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)
Management advisory services
Unqualified audit report
Substantive strategy
Closest reasonable estimate
36. 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
Representation letter
Business processes
General controls
Working papers
37. 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.
Scope limitation
Illegal act
Reporting
Reliance strategy
38. A subcommittee of the board of directors that is responsible for the financial reporting and disclosure process.
Illegal act
Disclaimer of opinion
Inspections of tangible assets
Audit committee
39. 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
Significant deficiency
Auditing
Internal control over financial reporting
40. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Expected misstatement
Misstatement
Application controls
Audit Evidence
41. Attribute-sampling techniques used to estimaed the dollar amount of misstatement for a class of transactions or an account balance.
Analytical procedures
Tolerable deviation rate
Monetary unit sampling
Observation
42. Test to detect errors or fraud in individual transactions.
Substantive tests of transactions
Analytical procedures
Assertions
Information asymmetry
43. 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
Risk of material misstatement
Auditing
Nonstatistical sampling
Generally accepted accounting principles (GAAP)
44. Computer programs that allow auditors to test computer files and databases.
Computer-assisted audit techniques (CAATs)
Substantive tests of transactions
Internal control over financial reporting
Inquiry
45. Expressed or implied representations by management that are reflected in the financial statement components
Financial statement assertions
Illegal acts
Control risk
Material Weakness
46. The deviation rate that the auditor expects to exist in the population.
Misstatement
Expected population deviation rate
Expected misstatement
Disclaimer of opinion
47. A violation of laws or governmental regulations.
Significant risk
Substantive tests of transactions
Illegal act
Standards of the PCAOB
48. The process of correcting a material weakness as part of management's assessment of the effectiveness of ICFR
Audit committee
Assertions
Remediation
Assertions
49. Computer programs that allow auditors to test computer files and databases.
Analytical procedures
Computer-assisted audit techniques (CAATs)
Detection risk
Management letter
50. A letter that formalizes the contract between the auditor and the client and outlines the responsibilities of both parties.
Ethics
Electronic (Internet) commerce
ateriality
Engagement letter