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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. An account or disclosure is significant if there is a reasonable possibility that the account or disclosure could contain a misstatement that - individually or when aggregated with others - has a material effect on the financial statements - consider






2. 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.






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






4. 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.






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






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






7. 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.






8. 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.






9. A violation of laws or governmental regulations.






10. 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.






11. A weakness in the design or operation of a control such that management or employeesm in the normal course of performing their assigned functions - fail to prevent - or detect misstatements on a timely basis.






12. The risk that the sample supports the conclusion that the recorded account balance is materially misstated when it is not materially misstated.






13. The policies and procedures that help ensure that management's directives are carried out.






14. 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.






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






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






17. 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 -






18. 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.






19. 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.






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






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






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






23. An event occurring between the balance sheet date and the audit report release date - Type I - Type II






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






25. 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






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






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






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






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






30. 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.






31. Specific acts performed by the auditor in gathering evidence to determine if specific assertations are being met.






32. 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






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






34. 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.






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






36. 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.






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






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






39. Risks resulting from significant conditions - events - circumstances - and actions or inactions that could adversely affect management's ability to execute its strategies and to achieve its objectives - or through the setting of inappropriate objecti






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






41. 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.






42. 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)






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






44. 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.






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






46. 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






47. Violations of laws or government regulations.






48. 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.






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






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