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Auditing Vocab

Subject : business-skills
Instructions:
  • Answer 50 questions in 15 minutes.
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  • 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 relevance of audit evidence refers to its relationship to the assertion or to the objective of the control being tested.






2. 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






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






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






5. 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






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






7. 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.






8. 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






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






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






11. 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






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






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






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






15. A violation of laws or governmental regulations.






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






17. A subcommittee of the board of directors that is responsible for the financial reporting and disclosure process.






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






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






20. 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






21. All the information used by the auditor in arriving at the conclusions on which the audit opinion is based; includes the information contained in the accounting records underlying the financial statements and other information






22. 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






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






24. 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






25. 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.






26. 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






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






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






29. 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.






30. 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






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






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






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. 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.






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






36. 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.






37. 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






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






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






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






41. 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.






42. 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.






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






44. 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)






45. Statements issued by the AICPA Auditing Standards Boards - considered as interpretations of the 10 GAAS statements.






46. The transmission of business transactions over telecommunication networks.






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






48. Persons elected by the stockholders of a corporation to oversee management and to direct the affairs of the corporation.






49. Existing condition or set of circumstances involving uncertainty about a possible loss that will ultimately be resolved when some future event occurs or fails to occur.






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







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