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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. 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






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






3. The extrapolation of sample results to the population; represents the auditors 'best estimate' of the misstatement in the sampling population






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






5. 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






6. 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






7. 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)






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






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






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






12. 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






13. 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.






14. 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






15. 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






16. 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.






17. The policies and procedures that help ensure that management's directives are carried out.






18. The policies and procedures that help ensure that management's directives are carried out.






19. A weakness in the design or operation of a control such that management or employeesm in the normal course of performing their assigned functions - fail to prevent - or detect misstatements on a timely basis.






20. 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.






21. The susceptibility of an assertion to material misstatement - assuming no related controls






22. 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.






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






24. 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






25. 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.






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






27. 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






28. 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)






29. 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.






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






31. Determination of the mathematical accuracy of documents or records.






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






33. Ten broad statements guiding the conduct of financial statement auditing.






34. The records of initial entries and supporting records - such as checks and records of electronic fund transfers; invoices; contracts; the general and subsidiary ledgers - journal entries - and other adjustments to the financial statements that are no






35. A confirmation request on which the recipient fills in the amount or furnishes the information requested.






36. Persons elected by the stockholders of a corporation to oversee management and to direct the affairs of the corporation.






37. 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






38. 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






39. 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.






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






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






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






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






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






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






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






47. 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.






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






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






50. Audit sampling that relies on the auditor's judgment to dewtermine the sample size - select the sample - and/or evaluate the results for the purpose of reaching a conclusion about the population.