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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. Financial statements prepared under regulatory - tax - cash basis - or other definitive criteria having substantial support.






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






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






4. 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.






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






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






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






8. The process of obtaining and evaluation a direct communication from a third party in response to a request for information about a particular item affecting financial statement assertions.






9. 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.






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






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






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






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






14. 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






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






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






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






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






19. 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.






20. Sampling used to estimate the proportion of a population that possesses a specified characteristic.






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






22. Attribute-sampling techniques used to estimaed the dollar amount of misstatement for a class of transactions or an account balance.






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






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






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






26. The auditor's opinion that the financial statements present fairly - in all material respects - in accordance with generally accepted accounting principles (or other comprehensive basis of accounting)-i.e. - a clean opinion.






27. 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.






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






29. 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






30. 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






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






32. 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






33. 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






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






35. The auditor's plan for the expected conduct - organization - and staffing of the audit.






36. 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.






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






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






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






40. A 'clean' audit report - indicating the auditor's opinion that a client's financial statements are fairly presented in accordance with agreed-upon criteria (eg. GAAP)






41. 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






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






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






44. 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.






45. 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.






46. 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






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






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






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






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