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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. 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.






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






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






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






5. 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.






6. 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.






7. 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.






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






9. 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






10. 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.






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






12. 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.






13. 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.






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






15. 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.






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






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






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






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. 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.






22. A letter that formalizes the contract between the auditor and the client and outlines the responsibilities of both parties.






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






24. 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






25. 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






26. 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






27. The transmission of business transactions over telecommunication networks.






28. The individual member of the population being sampled.






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






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






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






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






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






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






35. A financial statement assertion that has a reasonable possibility of containing a misstatement or misstatements that would cause financial statements to be materially misstated.






36. The process of correcting a material weakness as part of management's assessment of the effectiveness of ICFR






37. 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






38. The relevance of audit evidence refers to its relationship to the assertion or to the objective of the control being tested.






39. 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






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






41. Physical examination of the tangible assets.






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






43. 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






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






45. 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






46. Violations of laws or government regulations.






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






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






49. 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.






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