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






2. 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






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






4. Expressed or implied representations by management regarding recognition - measurement - presentation - and disclosure of information in the financial statements.






5. 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.






6. 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.






7. 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






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






9. Physical examination of the tangible assets.






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






11. 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.






12. An audit inquiry sent to the client's attorneys in order to obtain or corroborate information about litifation - claims - and assessments.






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






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






16. The diagnosticity of evidence; that is whether the type of evidence can be relied on to signal the true state of the assertion.






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






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






19. 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






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






21. 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.






22. 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.






23. 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






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






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






26. 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.






27. 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.






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






29. 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.






30. Audit evidence that includes minutes of meetings; confirmations from third parties; industry analysts' reports; comparable data about competitors (benchmarking); controls manuals; information obtained by the auditor from such audit procedures as inqu






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






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






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






34. 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






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






36. Sampling used to estimate the proportion of a population that possesses a specified characteristic.






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






39. 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






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






41. A control deficiency - or combination of control deficiencies - that adversely effects the entity's ability to initate - authorize - record - process - or report external financial data reliably in accordance with GAAP such that there is more than a






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






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






44. 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.






45. 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.






46. An audit of both financial statements and internal control over financial reporting - provided by the external auditor. Required for public companies.






47. Basic unit containing the elements of the population to be sampled






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






49. The transmission of business transactions over telecommunication networks.






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