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






2. The auditor's decision not to tely on the entity's controls and to audit the related financial statement accounts by relying more on substantive procedures.






3. The risk that the sample supports the conclusion that the recorded account balance is materially misstated when it is not materially misstated.






4. A violation of laws or governmental regulations.






5. All the information used by the auditor in arriving at the conclusions on which the audit opinion is based; includes the information contained in the accounting records underlying the financial statements and other information






6. 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.






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






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






9. The individual member of the population being sampled.






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






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






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






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






14. 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






15. 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






16. 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






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






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






19. 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






20. The auditor's opinion that the financial statements do not present fairly in accordance with generally accepted accounting principles (or other comprehensive basis of accounting) due to a pervasively material misstatement.






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






22. 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.






23. 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.






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






25. A risk of material misstatement that is important enough to require special audit consideration.






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






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






28. 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






29. 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)






30. 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.






31. The risk that the auditor may unknowingly fail to appropriately modify the opinion on materially misstated financial statements.






32. 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






33. 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






34. 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.






35. 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






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






37. 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.






38. 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.






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






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






41. 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






42. 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.






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






44. 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






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






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






47. 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.






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






49. 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






50. Process of watching a process or procedure being performed by others.







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