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Test your basic knowledge |
Auditing Vocab
Start Test
Study First
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. 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)
Unqualified audit report
Inquiry
Expected misstatement
Board of directors
2. The deviation rate that the auditor expects to exist in the population.
Expected population deviation rate
Generally accepted accounting principles (GAAP)
Reporting
Audit sampling
3. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.
Significant account or disclosure
Tests of details of account balances and disclosures
Audit committee
Closest reasonable estimate
4. Independent professional services that improve the quality of information - or its context - for decision makers. Encompasses attest services and financial statement audits.
Confirmation
Assurance Services
Control activities
Tests of details of account balances and disclosures
5. The total of the projected misstatement plus the allowance for sampling risk.
Qualified opinion
Desired confidence level
Upper misstatement limit
Sampling risk
6. 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.
General controls
Representation letter
Confirmation
Reasonable assurance
7. 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
Internal control
Inspections of records and documents
Information asymmetry
Significant deficiency
8. Risks resulting from significant conditions - events - circumstances - and actions or inactions that could adversely affect management's ability to execute its strategies and to achieve its objectives - or through the setting of inappropriate objecti
Business risks
Confirmation
Reperformance
Inspections of records and documents
9. 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
Business processes
Audit risk
Audit procedures
Application controls
10. A confirmation request to which the recipient responds only if the amount or information stated is incorrect.
Allowance for sampling risk
Negative confirmation
Board of directors
Control deficiency
11. A letter that corroborates oral representations made to the auditor by management or by other auditors and documents the continued appropriateness of such representations.
Substantive tests of transactions
Safeguarding of Assets
Representation letter
Material weakness
12. Expressed or implied representations by management regarding recognition - measurement - presentation - and disclosure of information in the financial statements.
Reasonable assurance
Nonsampling risk
Materiality
Assertions
13. Expressed or implied representations by management regarding the recognitions - measurement - presentation - and disclosure of information in the financial statements and related disclosures.
Assertions
Significant deficiency
Audit documentation (working papers)
Detection risk
14. 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.
Analytical procedures
Entity-level controls
Significant deficiency
Risk of incorrect acceptance
15. 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.
Unqualified opinion
Engagement quality review
Audit procedures
Other information
16. 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) - except for a material misstatement that does no
Qualified opinion
Fraud
Other information
Assertions
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.
Reporting
Expected population deviation rate
Significant deficiency
Control environment
18. Ten broad statements guiding the conduct of financial statement auditing.
Application controls
Generally accepted auditing standards (GAAS)
General controls
Lapping
19. 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.
Substantive strategy
Working papers
Materiality
Analytical procedures
20. Standards against which the quality of the auditor's performance is measured.
Subsequent event
Analytical procedures
Substantive procedures
Generally accepted auditing standards
21. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Substantive strategy
Application controls
Illegal acts
Risk of incorrect acceptance
22. Violations of laws or government regulations.
Assurance Services
Illegal acts
Audit procedures
ateriality
23. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Financial statement assertions
Reperformance
Application controls
Significant account or disclosure
24. 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.
Tolerable deviation rate
Scope of the audit
Tests of details of account balances and disclosures
Significant deficiency
25. 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.
Generally accepted accounting principles (GAAP)
Assertions
Illegal act
Control activities
26. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Application controls
General controls
Reliability of evidence
Ethics
27. Controls that related to the overall information processing environment and have a pervasive effect on the entity's computer operations
Financial statement assertions
General controls
Audit procedures
Control deficiency
28. The auditor's plan for the expected conduct - organization - and staffing of the audit.
Allowance for sampling risk
Audit strategy
Reliance strategy
Audit procedures
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.
Control environment
Confirmation
Sampling unit
Analytical procedures
30. Examination of internal or external records or documents that are in paper form - electronic form - or other media.
Inspections of records and documents
Working papers
Misstatement
Relevant Assertions
31. The policies and procedures that help ensure that management's directives are carried out.
Control activities
Application controls
Substantive tests of transactions
Engagement quality review
32. Determination of the mathematical accuracy of documents or records.
Control deficiency
Legal letter
Recalculation
Reporting
33. A system or code of conduct based on moral duties and obligations that indicates how an individual should behave.
Illegal act
Financial statement assertions
Scope of the audit
Ethics
34. 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
Statements on Auditing Standards
Corporate governance
Accounting records
Audit committee
35. Audit sampling that relies on the auditor's judgment to determine sample size - select the sample - and/or evaluate the results for the purpose of reaching a conclusion about the population.
Tests of controls
Nonstatistical sampling
Reliability of evidence
Audit strategy
36. 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.
Corporate governance
Generally accepted accounting principles (GAAP)
Engagement risk
Tests of controls
37. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Walkthrough
Risk of incorrect acceptance
Analytical procedures
Tolerable deviation rate
38. 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
Legal letter
Tests of controls
Management letter
Upper misstatement limit
39. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statement accounts.
Generally accepted accounting principles (GAAP)
Standards of the PCAOB
Working papers
Reliance strategy
40. 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
Significant risk
Misstatement
Attest
Control activities
41. Expressed or implied representations by management that are reflected in the financial statement components.
Substantive procedures
Engagement letter
Audit procedures
Assertions
42. 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.
Scope limitation
Control deficiency
Engagement quality review
Statistical sampling
43. A letter that formalizes the contract between the auditor and the client and outlines the responsibilities of both parties.
Tolerable misstatement
Engagement letter
Illegal act
Safeguarding of Assets
44. 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.
Analytical procedures
Reasonable assurance
Relevant Assertions
Generally accepted accounting principles (GAAP)
45. The magnitude of an omission or misstatement of accounting information that - in light of surrounding circumstances - makes it probable that the judgement of a reasonable person relying on the information would have been changed or influenced.
Sampling unit
Materiality
Electronic (Internet) commerce
Electronic data interchange
46. Intentional misstatements that can be classified as fraudulent financial reporting and/or misappropriation of assets.
Fraud
Corporate governance
Assurance Services
Management advisory services
47. 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.
Audit sampling
Analytical procedures
Analytical procedures
Audit Risk
48. Business transactions between individuals and organizations that occur without paper documents - using computers and telecommunication networks.
Electronic (Internet) commerce
Assurance Services
Audit procedures
Business risks
49. A risk of material misstatement that is important enough to require special audit consideration.
Significant risk
Management letter
Audit sampling
Significant account or disclosure
50. An audit of both financial statements and internal control over financial reporting - provided by the external auditor. Required for public companies.
Desired confidence level
Legal letter
Electronic (Internet) commerce
Integrated audit