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Test your basic knowledge |
Auditing Vocab
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Subject
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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 policies and procedures that help ensure that management's directives are carried out.
Safeguarding of Assets
Audit procedures
Control activities
Computer-assisted audit techniques (CAATs)
2. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Analytical procedures
Tests of details of account balances and disclosures
Lapping
Sampling unit
3. A state of objectivity in fact and in appearance - including the absence of any significant conflicts of interest.
Risk of material misstatement
Independence
Classical variables sampling
Relevant Assertions
4. The uncertainty that results from sampling; the difference between the expected mean of the population and the tolerable deviation or misstatement.
Allowance for sampling risk
Lapping
Entity-level controls
Substantive strategy
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
Internal Control
Monetary unit sampling
Risk of inccorect rejection
Disclaimer of opinion
6. 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
Walkthrough
Relevant Assertions
Representation letter
Control objective
7. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Representation letter
Control deficiency
Application controls
Remediation
8. Violations of laws or government regulations.
Generally accepted auditing standards (GAAS)
Audit procedures
Illegal acts
Material weakness
9. 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
Walkthrough
Management letter
Analytical procedures
Legal letter
10. 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.
Audit procedures
Working papers
Reliance strategy
Adverse opinion
11. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Control risk
Inherent risk
Statistical sampling
Audit procedures
12. 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.
Reasonable assurance
Statements on Auditing Standards
Financial Statement Assertions
Dual dating
13. An attitude that includes a questioning mind and a critical assessment of an audit evidence. The auditor should not assume that management is either honest or dishonest.
General controls
Professional skepticism
Subsequent event
Analytical procedures
14. The auditor's principal record of the work performed and the basis for the conclusions in the auditor's report. It also facilitates the planning - performance - and supervision of the engagement and provides the basis for the review of the quality of
Audit documentation (working papers)
Tests of details of account balances and disclosures
Recalculation
Illegal act
15. The method by which an entity's board of 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 efficie
Internal control
Ethics
Recalculation
ateriality
16. Unintentional misstatements or omissions of amounts or disclosures.
Errors
Audit procedures
General controls
Disclaimer of opinion
17. A violation of laws or governmental regulations.
Risk assessment
Generally accepted auditing standards (GAAS)
Illegal act
Audit sampling
18. A confirmation request to which the recipient responds whether or not he or she agrees with the amount or information stated.
Analytical procedures
Confidence bound
Other information
ositive confirmation
19. 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
Relevant Assertions
Risk of inccorect rejection
Sampling risk
Generally accepted accounting principles (GAAP)
20. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
Analytical procedures
Tests of controls
Sampling unit
Working papers
21. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Analytical procedures
Reliance strategy
Sampling risk
Risk of material misstatement
22. 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.
Upper misstatement limit
Representation letter
Audit evidence
Materiality
23. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Accounting records
Analytical procedures
Generally accepted accounting principles (GAAP)
Scope limitation
24. Seeking information of knowledgeable persons - both financial and nonfinancial - throughout the entity or outside the entity.
Blank or zero-balance confirmations
Classical variables sampling
Sampling unit
Inquiry
25. A risk of material misstatement that is important enough to require special audit consideration.
Significant risk
Sampling risk
Analytical procedures
Reliance strategy
26. 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.
Standards of the PCAOB
Board of directors
Application controls
Engagement risk
27. An organization created to provide professional accounting-related services - including auditing. Usually formed as a proprietorship or as a form of partnership.
Audit risk
Control risk
Assertions
Public accounting firm
28. A letter that corroborates oral representations made to the auditor by management or by other auditors and documents the continued appropriateness of such representations.
Representation letter
Lapping
Positive confirmation
Application controls
29. The uncertainty that results from sampling; the difference between the expected mean of the population and the tolerable deviation or misstatement.
Reliability of evidence
Audit Risk
Dual dating
Allowance for sampling risk
30. A letter that formalizes the contract between the auditor and the client and outlines the responsibilities of both parties.
Engagement letter
Management advisory services
Significant deficiency
Control risk
31. 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.
Audit sampling
Remediation
ositive confirmation
Risk of incorrect acceptance
32. A measure of sampling risk added and subtracted to the projected misstatement to form a confidence interval.
Confidence bound
Audit sampling
Working papers
Reasonable assurance
33. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting and correcting - material misstatements at the relevant assertion level.
General controls
Negative confirmation
Tests of controls
Electronic (Internet) commerce
34. Process of watching a process or procedure being performed by others.
Misstatement
Lapping
Observation
Professional skepticism
35. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
Contingent liability
Unqualified opinion
Assertions
General controls
36. The total of the projected misstatement plus the allowance for sampling risk.
Application controls
Significant deficiency
Generally accepted auditing standards
Upper misstatement limit
37. 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
Application controls
Generally accepted auditing standards (GAAS)
Audit committee
Entity-level controls
38. 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.
Reasonable assurance
ateriality
Audit evidence
Statistical sampling
39. 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.
Substantive procedures
Substantive strategy
Projected misstatement
Unqualified audit report
40. The risk that the entity's financial statements will contain a material misstatements whether caused by error or fraud.
Contingent liability
Risk of material misstatement
Control risk
Control risk
41. The risk that the auditor will not detect a material misstatement that exists in the financial statements
Qualified opinion
Control deficiency
Board of directors
Detection risk
42. The auditor's plan for the expected conduct - organization - and staffing of the audit.
Tolerable misstatement
Misstatement
Audit strategy
Allowance for sampling risk
43. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data
Analytical procedures
Engagement letter
Inherent risk
Audit documentation (working papers)
44. 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
Internal control
Monetary unit sampling
Monitoring of controlsa
Dual dating
45. Attribute-sampling techniques used to estimaed the dollar amount of misstatement for a class of transactions or an account balance.
Application controls
Nonstatistical sampling
Monetary unit sampling
Nonsampling risk
46. Computer programs that allow auditors to test computer files and databases.
Computer-assisted audit techniques (CAATs)
Corporate governance
Remediation
Risk of inccorect rejection
47. Examination of internal or external records or documents that are in paper form - electronic form - or other media.
Audit committee
Inquiry
Statistical sampling
Inspections of records and documents
48. Tests to detect errors or fraud in individual transactions.
Materiality
Auditing
Substantive tests of transactions
Monitoring of controls
49. 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
Significant account or disclosure
Tests of controls
Standards of the PCAOB
Recalculation
50. Standards against which the quality of the auditor's performance is measured.
Generally accepted auditing standards
Audit procedures
ositive confirmation
Computer-assisted audit techniques (CAATs)
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