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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 violation of laws or governmental regulations.






2. 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.






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






4. The process of correcting a material weakness as part of management's assessment of the effectiveness of ICFR






5. 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






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






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






8. 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.






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






10. 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






11. The auditor's decision not to rely on the entity's controls and to audit the related financial statement account by relying more on substantive procedures.






12. Specific acts performed as the auditor gathers evidence to determine if specific audit objectives are being met.






13. Violations of laws or government regulations.






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






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






16. 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.






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






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






19. 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






20. 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






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






22. 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.






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






24. 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






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






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






27. 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






28. Expressed or implied representations by management about information that is reflected in the financial statements. The three sets of assertions related to ending account balances - transactions - and presentation and disclosure.






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






30. 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.






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






32. 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.






33. 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






34. 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.






35. A process that assess the quality of internal control performance over time.






36. 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






37. 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.






38. Statements issued by the AICPA Auditing Standards Boards - considered as interpretations of the 10 GAAS statements.






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






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






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






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






43. The risk that the sample supports the conclusion that the control is not operating effectively when it actually is or that the recorded account balance is materially misstated when it is not materially misstated.






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






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






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






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






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






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






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