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






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






3. Physical examination of the tangible assets.






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






5. An attitude that includes a questioning mind and a critical assessment of an audit evidence. The auditor should not assume that management is either honest or dishonest.






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






7. A violation of laws or governmental regulations.






8. 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.






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






10. 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






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






12. 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.






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






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






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






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






17. 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.






18. Independent professional services that improve the quality of information - or its context - for decision makers. Encompasses attest services and financial statement audits.






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






20. 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.






21. 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.






22. Unintentional misstatements or omissions of amounts or disclosures.






23. 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.






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






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






26. 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.






27. 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






28. A confirmation request on which the recipient fills in the amount or furnishes the information requested.






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






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






31. 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.






32. 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






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






34. 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.






35. 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.






36. 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)






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






38. 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






39. 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






40. Issued when auditors do not express an opinion on the fairness of the entity's financial statements. Can be issued for pervasive going-concern uncertainties - pervasive scope limitations - and situations in which the auditors are not independent.






41. 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.






42. The risk that the auditor may unknowingly fail to appropriately modify his or her opinion on financial statements that are materially misstated.






43. 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






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






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






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






47. A committee consisting of members of the board of directors - charged with overseeing the entity's system of internal control over financial reporting - internal and external auditors - and financial reporting process. Members typically must be indep






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






49. 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






50. 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.