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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 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.






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






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






4. Sampling used to estimate the proportion of a population that possesses a specified characteristic.






5. 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






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






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






9. A confirmation request to which the recipient responds whether or not he or she agrees with the amount or information stated.






10. The auditor's principal record of the work performed and the basis for the conclusions in the auditor's report. It also facilitates the planning - performance - and supervision of the engagement and provides the basis for the review of the quality of






11. 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






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






13. A violation of laws or governmental regulations.






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






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






16. The risk that the auditor may unknowingly fail to appropriately modify his or her opinion on financial statements that are materially misstated.






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






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






19. A deficiency - or combination of deficiencies - in internal control - such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented - or detected and corrected - on a timely basis.






20. 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.






21. 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.






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






23. 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.






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






25. The diagnosticity of evidence; that is whether the type of evidence can be relied on to signal the true state of the assertion.






26. The risk that the entity's financial statements will contain a material misstatements whether caused by error or fraud.






27. Test of transactions that both evaluate the effectiveness of controls and detect monetary errors.






28. 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.






29. 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)






30. Test to detect errors or fraud in individual transactions.






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






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






33. 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






34. A measure of sampling risk added and subtracted to the projected misstatement to form a confidence interval.






35. 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.






36. 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.






37. 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.






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






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






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






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






42. Risks resulting from significant conditions - events - circumstances - and actions or inactions that could adversely affect management's ability to execute its strategies and to achieve its objectives - or through the setting of inappropriate objecti






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






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






45. 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.






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






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






48. Ten broad statements guiding the conduct of financial statement auditing.






49. The maximum deviation rate from a prescribed control that the auditor is willing to accept without altering the planned assessed level of control risk.






50. 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.