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






2. 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.






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






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






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






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






7. 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






8. The total of the projected misstatement plus the allowance for sampling risk.






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






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






11. 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






12. A letter that formalizes the contract between the auditor and the client and outlines the responsibilities of both parties.






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. 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.






15. 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.






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






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






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






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






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. 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.






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






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






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






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






27. An organization created to provide professional accounting-related services - including auditing. Usually formed as a proprietorship or as a form of partnership.






28. 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.






29. Substantive tests that concentrate on the details of items contained in the account balance and disclosures.






30. 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)






31. 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.






32. 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






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






34. 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.






35. All the information used by the auditor in arriving at the conclusions on which the audit opinion is based - and includes the information contained in the accounting records underlying the financial statements and other information such as minutes of






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






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






38. A systematic process of (1) objectively obtaining an evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and (2) communicating the resu






39. 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.






40. 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.






41. 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.






42. Expressed or implied representations by management regarding the recognitions - measurement - presentation - and disclosure of information in the financial statements and related disclosures.






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






44. The tone of an organization - which reflects the overall attitude - awareness - and actions of the board of directors - management - and owners influencing the control consciousness of its people.






45. 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.






46. A transaction being traced by an auditor from origination through the entity's information system until it is reflected in the entity's financial reports; it encompasses the entire process of initiating - authorizing - recording - processing - and re






47. Specific acts performed by the auditor in gathering evidence to determine if specific assertations are being met.






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






49. 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.






50. 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