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






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






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






4. A confirmation request to which the recipient responds only if the amount or information stated is incorrect.






5. The records of initial entries and supporting records - such as checks and records of electronic fund transfers; invoices; contracts; the general and subsidiary ledgers - journal entries - and other adjustments to the financial statements that are no






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






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






8. 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






9. 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.






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






11. An audit of both financial statements and internal control over financial reporting - provided by the external auditor. Required for public companies.






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






13. 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






14. 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






15. The end product of the auditor's work indicating the auditing standards followed - and expressing an opinion as to whether an entity's financial statements are fairly presented in accordance with agreed-upon criteria (eg. GAAP)






16. 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






17. 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.






18. 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.






19. 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






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






21. A service when a practitioner is engaged to issue or does issue a report on a subject matter - or an assertion about subject matter - that is the responsibility of another party. Encompasses financial statement audits.






22. When a subsequent event disclosed in the financial statements occurs after the date of the report but before the issuance of the related financial statements - the auditor may use dual dating. The auditor may use the original date of the report excep






23. 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






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






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






26. The probability that the true but unknown measure of the characteristic of interest is within specified limits.






27. 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






28. 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






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






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






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






32. 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.






33. 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.






34. 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.






35. Physical examination of the tangible assets.






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






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






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






39. The susceptibility of an assertion to material misstatement - assuming no related controls






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






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






42. 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.






43. Consulting services that may provide advice and assistance concerning an entity's organization - personnel - finances - operations - systems - or other activities






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






45. 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.






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






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






48. Seeking information of knowledgeable persons - both financial and nonfinancial - throughout the entity or outside the entity.






49. The deviation rate that the auditor expects to exist in the population.






50. 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.