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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 state of objectivity in fact and in appearance - including the absence of any significant conflicts of interest.






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






3. Computer programs that allow auditors to test computer files and databases.






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






5. An instance where a financial statement assertion is not in accordance with the criteria against which it is audited (e.g: GAAP). Misstatements may be classified as fraud (intentional) - other illegal acts such as noncompliance with laws and regulati






6. 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






7. Ten broad statements guiding the conduct of financial statement auditing.






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






9. 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.






10. The policies and procedures that help ensure that management's directives are carried out.






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






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






13. 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






14. 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






15. 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






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






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






18. 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






19. 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)






20. 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)






21. 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






22. 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






23. 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.






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






25. Sampling that uses the laws of probability to select and evaluate the results of an audit sample - thereby permitting the auditor to quantify the sampling risk for the purpose of reaching a conclusion about the population.






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






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






28. All the information used by the auditor in arriving at the conclusions on which the audit opinion is based; includes the information contained in the accounting records underlying the financial statements and other information






29. Sampling that uses the laws of probability to select and evaluate the results of an audit sample - thereby permitting the auditor to quantify the sampling risk for the purpose of reaching a conclusion about the population






30. 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






31. 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.






32. 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.






33. Persons elected by the stockholders of a corporation to oversee management and to direct the affairs of the corporation.






34. A system or code of conduct based on moral duties and obligations that indicates how an individual should behave.






35. 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.






36. 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.






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






38. Violations of laws or government regulations.






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






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






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






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






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






44. 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.






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






46. Standards against which the quality of the auditor's performance is measured.






47. 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.






48. 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.






49. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.






50. Accounting principles that are generally accepted for the preparation of financial statements in the United States. GAAP standards are currently issued primarily by the FASB - with oversight and influence by the SEC.