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Test your basic knowledge |
Auditing Vocab
Start Test
Study First
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. The identification - analysis - and management of risks relevant to the preparation of financial statements that are fairly presented in conformity with GAAP.
Computer-assisted audit techniques (CAATs)
Substantive strategy
Classical variables sampling
Risk assessment
2. A confirmation request to which the recipient responds whether or not he or she agrees with the amount or information stated.
ositive confirmation
Sampling unit
Ethics
Inspections of tangible assets
3. 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.
Assertions
Working papers
Information asymmetry
Recalculation
4. 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
Reliance strategy
Control deficiency
Dual dating
Substantive tests of transactions
5. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statements accounts.
Safeguarding of Assets
Monitoring of controls
Reliance strategy
General controls
6. 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)
Unqualified audit report
Relevance of evidence
Errors
Control environment
7. A measure of sampling risk added and subtracted to the projected misstatement to form a confidence interval.
Audit sampling
Audit risk
Reliance strategy
Confidence bound
8. Independent professional services that improve the quality of information - or its context - for decision makers. Encompasses attest services and financial statement audits.
Assurance Services
Reperformance
Reliance strategy
Tests of controls
9. 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
Other information
Unqualified audit report
Other comprehensive basis of accounting
Material Weakness
10. Specific acts performed as the auditor gathers evidence to determine if specific audit objectives are being met.
Engagement letter
Generally accepted accounting principles (GAAP)
Sampling risk
Audit procedures
11. A confirmation request to which the recipient responds only if the amount or information stated is incorrect.
Negative confirmation
Engagement quality review
Audit procedures
Sampling unit
12. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statement accounts.
Risk of material misstatement
Reliance strategy
Errors
Statistical sampling
13. 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
Significant deficiency
Independence
Relevance of evidence
Analytical procedures
14. Sampling used to estimate the proportion of a population that possesses a specified characteristic.
Attribute sampling
Tests of controls
Legal letter
Analytical procedures
15. The policies and procedures that help ensure that management's directives are carried out.
Statements on Auditing Standards
Analytical procedures
Substantive procedures
Control activities
16. Controls that related to the overall information processing environment and have a pervasive effect on the entity's computer operations
General controls
Inquiry
Application controls
Significant deficiency
17. Audit procedures performed to test material misstatements in an account balance - transaction class - or disclosure component of the financial statements.
Information asymmetry
Dual-purpose tests
Substantive procedures
Board of directors
18. The auditor's independent execution of procedures or controls that were originally performed as part of other entity's internal control - either manually or through the use of CAATs.
Detection risk
Control environment
Reperformance
Engagement quality review
19. 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
Allowance for sampling risk
Representation letter
Audit committee
Control activities
20. 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.
Electronic (Internet) commerce
Classical variables sampling
Audit committee
Information asymmetry
21. 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.
Significant deficiency
Confirmation
Sampling unit
Reasonable assurance
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.
Scope of the audit
Fraud
Nonstatistical sampling
Professional skepticism
23. Expressed or implied representations by management regarding the recognitions - measurement - presentation - and disclosure of information in the financial statements and related disclosures.
Other information
Assertions
Tests of controls
Audit risk
24. 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.
Generally accepted auditing standards (GAAS)
Standards of the PCAOB
Significant deficiency
Contingent liability
25. Seeking information of knowledgeable persons - both financial and nonfinancial - throughout the entity or outside the entity.
Reliability of evidence
Inquiry
Standards of the PCAOB
Assertions
26. The auditor's decision to rely on the entity's controls - test those controls - and reduce the directs test of financial statement accounts.
Statistical sampling
Generally accepted auditing standards (GAAS)
Reliance strategy
Substantive strategy
27. An organization created to provide professional accounting-related services - including auditing. Usually formed as a proprietorship or as a form of partnership.
Risk of incorrect acceptance
Public accounting firm
Audit procedures
Classical variables sampling
28. 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.
Contingent liability
Management advisory services
Assertions
Electronic data interchange
29. 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.
Risk of incorrect acceptance
Analytical procedures
Engagement risk
Sampling risk
30. The risk that the auditor may unknowingly fail to appropriately modify his or her opinion on financial statements that are materially misstated.
Sampling risk
Desired confidence level
Audit Risk
Positive confirmation
31. A process that assesses the quality of internal control performance over time.
Control risk
Monitoring of controls
Significant deficiency
Substantive procedures
32. The risk that the auditor will not detect a material misstatement that exists in the financial statements
Reperformance
Detection risk
Safeguarding of Assets
Substantive tests of transactions
33. A violation of laws or governmental regulations.
Nonsampling risk
Management advisory services
Illegal act
Tests of controls
34. An event occurring between the balance sheet date and the audit report release date - Type I - Type II
Subsequent event
Detection risk
Remediation
Engagement risk
35. 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.
Control environment
Sampling risk
Risk assessment
Substantive strategy
36. A deficiency - or combination of deficiencies - that results in a reasonable possibility that a material misstatement of the company's annual or interim financial stsatements will not be prevented or detected on a timely basis
Risk of material misstatement
Material Weakness
Auditing
Control activities
37. The probability that the true but unknown measure of the characteristic of interest is within specified limits.
Computer-assisted audit techniques (CAATs)
Accounting records
Desired confidence level
Generally accepted auditing standards
38. 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.
Assurance Services
Generally accepted auditing standards
Substantive strategy
Analytical procedures
39. 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.
Materiality
Remediation
Control deficiency
Reporting
40. A service when a practitioner is engaged to issue or does issue a report on a subject matter - or an assertion about subject matter - that is the responsibility of another party. Encompasses financial statement audits.
Auditing
Substantive strategy
Subsequent event
Attest
41. The uncertainty that results from sampling; the difference between the expected mean of the population and the tolerable deviation or misstatement.
Relevant Assertions
Allowance for sampling risk
Confidence bound
Lapping
42. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting and correcting - material misstatements at the relevant assertion level.
Statements on Auditing Standards
Reasonable assurance
Tests of controls
Standards of the PCAOB
43. 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
Entity-level controls
Inherent risk
Closest reasonable estimate
Statistical sampling
44. The total of the projected misstatement plus the allowance for sampling risk.
Allowance for sampling risk
Upper misstatement limit
Nonstatistical sampling
Audit Risk
45. The deviation rate that the auditor expects to exist in the population.
Classical variables sampling
Expected population deviation rate
Allowance for sampling risk
Tests of details of account balances and disclosures
46. 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.
Reasonable assurance
Audit procedures
Control risk
Control deficiency
47. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.
Internal Control
Tests of details of account balances and disclosures
Control objective
Tolerable misstatement
48. The use of normal distribution theory to estimate the dollar amount of misstatement for a class of transactions or an account balance.
Classical variables sampling
Tests of controls
Risk of incorrect rejection
Detection risk
49. 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.
Audit procedures
Audit Evidence
Control activities
Significant deficiency
50. The use of normal distribution theory to estimate the dollar amount of misstatement for a class of transactions or an account balance.
Board of directors
Business processes
Analytical procedures
Classical variables sampling