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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. 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






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






3. 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.






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






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






6. A subcommittee of the board of directors that is responsible for the financial reporting and disclosure process.






7. The transmission of business transactions over telecommunication networks.






8. 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






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






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






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






12. An organization created to provide professional accounting-related services - including auditing. Usually formed as a proprietorship or as a form of partnership.






13. Expressed or implied representations by management that are reflected in the financial statement components.






14. 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






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






16. Business transactions between individuals and organizations that occur without paper documents - using computers and telecommunication networks.






17. 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






18. 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.






19. Expressed or implied representations by management regarding recognition - measurement - presentation - and disclosure of information in the financial statements.






20. Attribute sampling techniques used to estimate the dollar amount of misstatement for a class of transactions or an account balance.






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






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






23. 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.






24. The process of covering a cash shortage by applying cash from one customer's accounts receivable against another customer's accounts receivable.






25. 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.






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






27. 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.






28. 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






29. 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






30. 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.






31. 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.






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






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






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






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






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






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






38. 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






39. 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.






40. 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.






41. 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






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






43. 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






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






45. 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.






46. 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






47. The risk that the auditor will not detect a material misstatement that exists in the financial statements






48. 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.






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






50. The auditor's decision to rely on the entity's controls - test those controls - and reduce the directs test of financial statement accounts.






Can you answer 50 questions in 15 minutes?



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