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






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






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






4. 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






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






6. Risks resulting from significant conditions - events - circumstances - and actions or inactions that could adversely affect management's ability to execute its strategies and to achieve its objectives - or through the setting of inappropriate objecti






7. 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.






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






9. 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.






10. The auditor's opinion that the financial statements present fairly - in all material respects - in accordance with generally accepted accounting principles (or other comprehensive basis of accounting) - except for a material misstatement that does no






11. 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.






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






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






14. 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.






15. 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.






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






17. Seeking information of knowledgeable persons - both financial and nonfinancial - throughout the entity or outside the entity.






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






19. 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






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






21. 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






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






23. 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






24. Unintentional misstatements or omissions of amounts or disclosures.






25. 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






26. 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.






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






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.






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






30. 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.






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






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






33. 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






34. 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.






35. 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.






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






37. 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.






38. Issued when auditors do not express an opinion on the fairness of the entity's financial statements. Can be issued for pervasive going-concern uncertainties - pervasive scope limitations - and situations in which the auditors are not independent.






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






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






41. A measure of sampling risk added and subtracted to the projected misstatement to form a confidence interval.






42. 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.






43. 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






44. Process of watching a process or procedure being performed by others.






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






46. A subcommittee of the board of directors that is responsible for the financial reporting and disclosure process.






47. 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.






48. 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






49. The relevance of audit evidence refers to its relationship to the assertion or to the objective of the control being tested.






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