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Auditing Vocab

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






2. 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.






3. 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






4. Attribute-sampling techniques used to estimaed the dollar amount of misstatement for a class of transactions or an account balance.






5. 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






6. The risk that the auditor will not detect a material misstatement that exists in the financial statements






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






8. The maximum deviation rate from a prescribed control that the auditor is willing to accept without altering the planned assessed level of control risk.






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






10. 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.






11. The transmission of business transactions over telecommunication networks.






12. The individual member of the population being sampled.






13. 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.






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






15. 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.






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






17. 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






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






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






20. Consulting services that may provide advice and assistance concerning an entity's organization - personnel - finances - operations - systems - or other activities






21. The end product of the auditor's work indicating the auditing standards followed - and expressing an opinion as to whether an entity's financial statements are fairly presented in accordance with agreed-upon criteria (eg. GAAP)






22. 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






23. 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.






24. 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.






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






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






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






28. 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






29. 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






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






31. 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






32. 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






33. The deviation rate that the auditor expects to exist in the population.






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






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






36. 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






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






38. 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.






39. 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






40. 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






41. 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.






42. 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






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






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. 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






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






47. 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






48. 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.






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






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







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