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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. Intentional misstatements that can be classified as fraudulent financial reporting and/or misappropriation of assets.






2. 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.






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






4. 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






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






6. Specific acts performed by the auditor in gathering evidence to determine if specific assertions are met.






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






8. The risk that the entity's financial statements will contain a material misstatements whether caused by error or fraud.






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






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






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






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






14. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.






15. 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.






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






17. 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






18. Physical examination of the tangible assets.






19. The identification - analysis - and management of risks relevant to the preparation of financial statements that are fairly presented in conformity with GAAP.






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






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. 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.






24. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.






25. 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)






26. 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.






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






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






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






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






31. 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.






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






33. 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.






34. 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.






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






36. 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






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






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






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






40. The method by which an entity's board of 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 efficie






41. A process that assesses the quality of internal control performance over time.






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






43. 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






44. Attribute sampling techniques used to estimate the dollar amount of misstatement for a class of transactions or an account balance.






45. A deficiency - or combination of deficiencies - in internal control - such that there is a reasonable possibility that a material misstatememnt of the entity's financial statements will not be prevent - or detected and corrected on a timely basis.






46. 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.






47. 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






48. 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.






49. 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.






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