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






2. An audit inquiry sent to the client's attorneys in order to obtain or corroborate information about litifation - claims - and assessments.






3. 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.






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






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






6. A process designed by - or under the supervision of - the company's principal executive and principal financial officers - or persons performing similar functions - and effected by the company's board of directors - management - and other personnel -






7. 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






8. 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






9. Existing condition or set of circumstances involving uncertainty about a possible loss that will ultimately be resolved when some future event occurs or fails to occur.






10. The concept that the manager generally has more information about the true financial position and results of operations of the entity than the absentee owner does.






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






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






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






14. 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.






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






16. 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.






17. 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






18. 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.






19. The auditor's decision not to tely on the entity's controls and to audit the related financial statement accounts by relying more on substantive procedures.






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






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






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






23. 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.






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






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






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






27. 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






28. Violations of laws or government regulations.






29. 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.






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






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






32. A state of objectivity in fact and in appearance - including the absence of any significant conflicts of interest.






33. 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






34. 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






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






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






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






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. Papers that document the evidence gathered by auditors to show the work they have done - the methods and procedures they have followed - and the conclusions they have developed in an audit of financial statements or other type of engagement.






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






41. 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.






42. A violation of laws or governmental regulations.






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






44. 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






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






46. 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






47. The auditor's opinion that the financial statements do not present fairly in accordance with generally accepted accounting principles (or other comprehensive basis of accounting) due to a pervasively material misstatement.






48. 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






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






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