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






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






3. 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)






4. 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






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






6. Expressed or implied representations by management about information that is reflected in the financial statements. The three sets of assertions related to ending account balances - transactions - and presentation and disclosure.






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






8. Violations of laws or government regulations.






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






10. An objective for ICFR generally relates to a relevant financial statement assertion and states a criterion for evaluating whether the company's control procedures in a specific area provide reasonable assurance that a misstatement or omission in that






11. 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.






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






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






14. 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






15. 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.






16. A review of audit documentation by an additional person (normally - a partner or equivalent with the firm) who has not been involved with the audit; its purpose is to ensure that quality of the audit work and reporting is consistent with the quality






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






18. 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.






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






20. 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.






21. 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.






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






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






24. 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






25. A violation of laws or governmental regulations.






26. 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






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






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






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






30. A systematic process of (1) objectively obtaining an evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and (2) communicating the resu






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






32. Unintentional misstatements or omissions of amounts or disclosures.






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






34. The transmission of business transactions over telecommunication networks.






35. The individual member of the population being sampled.






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






37. 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






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






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






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






41. 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.






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






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






44. 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






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






46. 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.






47. 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.






48. 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






49. 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.






50. 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







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