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






2. A process designed by - or under the supervision of - the company's principal executive and principal financial officers - or persons performing similar functions - and effected by the company's board of directors - management - and other personnel -






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






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






5. 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.






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






7. 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.






8. 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.






9. 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.






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






11. Unintentional misstatements or omissions of amounts or disclosures.






12. 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






13. The risk that the auditor will not detect a material misstatement that exists in the financial statements






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






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






16. 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.






17. 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)






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






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






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






21. The end product of the auditor's work indicating the auditing standards followed - and expressing an opinion as to whether an entity's financial statements are fairly presented in accordance with agreed-upon criteria (eg. GAAP)






22. 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.






23. 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.






24. An event occurring between the balance sheet date and the audit report release date - Type I - Type II






25. 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






26. The probability that the true but unknown measure of the characteristic of interest is within specified limits.






27. A confirmation request to which the recipient responds only if the amount or information stated is incorrect.






28. 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.






29. 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






30. 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






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






32. A range of acceptable amounts or a precisely determined point estimate for an estimate (eg. uncollectible receivables) - if that is a better estimate than any other amount






33. 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.






34. 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






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






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






37. 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.






38. 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.






39. 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






40. A violation of laws or governmental regulations.






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






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






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






44. 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






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






46. 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.






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






48. 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






49. 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.






50. 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