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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 instance where a financial statement assertion is not in accordance with the criteria against which it is audited (e.g: GAAP). Misstatements may be classified as fraud (intentional) - other illegal acts such as noncompliance with laws and regulati






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






3. The amount of misstatement that the auditor believes exists in the population.






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






5. 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.






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






7. 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.






8. 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






9. 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






10. 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.






11. The maximum deviation rate from a prescribed control that the auditor is willing to accept without altering the planned assessed level of control risk.






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






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






14. 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.






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






16. 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.






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






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






19. 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






20. 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.






21. Consulting services that may provide advice and assistance concerning an entity's organization - personnel - finances - operations - systems - or other activities






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






23. 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






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






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






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






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






28. 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






29. 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.






30. 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.






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






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






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






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






35. 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






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






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






38. The individual member of the population being sampled.






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






40. 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.






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






43. Unintentional misstatements or omissions of amounts or disclosures.






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






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






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






47. Seeking information of knowledgeable persons - both financial and nonfinancial - throughout the entity or outside the entity.






48. The diagnosticity of evidence; that is whether the type of evidence can be relied on to signal the true state of the assertion.






49. Violations of laws or government regulations.






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