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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. Physical examination of the tangible assets.






2. Violations of laws or government regulations.






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






4. A violation of laws or governmental regulations.






5. 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.






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






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






8. 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.






9. A control deficiency - or combination of control deficiencies - that adversely effects the entity's ability to initate - authorize - record - process - or report external financial data reliably in accordance with GAAP such that there is more than a






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






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






12. 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.






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






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






15. 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.






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






17. 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






18. 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.






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






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






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






22. A deficiency in internal control exists when the design or operation of a control does not allow management or employees - in the normal course of performing their assigned functions - to prevent - or detect and correct misstatements on a timely basi






23. 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.






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






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






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






27. A deficiency - or combination of deficiencies - that results in a reasonable possibility that a material misstatement of the company's annual or interim financial stsatements will not be prevented or detected on a timely basis






28. The transmission of business transactions over telecommunication networks.






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






30. 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.






31. 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






32. 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






33. Standards regarding the conduct of financial statement auditing for public companies. Currently - consist primarily of standards and statements established by the AICPA's Auditing Standards Board - as these statements and standards were adopted by th






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






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






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






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






38. 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.






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






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






41. 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.






42. Basic unit containing the elements of the population to be sampled






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






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






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






46. 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.






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






48. The amount of misstatement that the auditor believes exists in the population.






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






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







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