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Test your basic knowledge |
Auditing Vocab
Start Test
Study First
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. Specific acts performed by the auditor in gathering evidence to determine if specific assertions are met.
Audit procedures
Inspections of tangible assets
Analytical procedures
Illegal acts
2. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Control risk
Engagement risk
Analytical procedures
Tests of controls
3. 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
Standards of the PCAOB
Nonsampling risk
Analytical procedures
Entity-level controls
4. 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.
Expected misstatement
Nonstatistical sampling
Control deficiency
Audit documentation (working papers)
5. 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.
Disclaimer of opinion
Upper misstatement limit
Analytical procedures
Material weakness
6. A measure of sampling risk added and subtracted to the projected misstatement to form a confidence interval.
Board of directors
Confidence bound
Audit risk
Risk assessment
7. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
Internal control over financial reporting
Nonsampling risk
Tests of controls
General controls
8. 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.
Disclaimer of opinion
Substantive strategy
Application controls
Generally accepted accounting principles (GAAP)
9. Controls that related to the overall information processing environment and have a pervasive effect on the entity's computer operations
Material weakness
General controls
Errors
Substantive tests of transactions
10. 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.
Reliance strategy
Expected population deviation rate
Walkthrough
Risk of incorrect rejection
11. Ten broad statements guiding the conduct of financial statement auditing.
Monetary unit sampling
Generally accepted auditing standards (GAAS)
Tolerable misstatement
Scope of the audit
12. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Monitoring of controls
Risk of material misstatement
Classical variables sampling
Application controls
13. 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.
Classical variables sampling
Unqualified audit report
Reasonable assurance
Tolerable deviation rate
14. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Audit sampling
Control risk
Control environment
Internal Control
15. The auditor's plan for the expected conduct - organization - and staffing of the audit.
Adverse opinion
Audit strategy
Audit evidence
Confirmation
16. The risk that the auditor may unknowingly fail to appropriately modify his or her opinion on financial statements that are materially misstated.
Audit procedures
Audit committee
Audit Risk
Risk of incorrect acceptance
17. 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.
Control objective
Control risk
Materiality
Sampling unit
18. 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.
Control environment
Tests of controls
Inspections of records and documents
Control risk
19. The use of normal distribution theory to estimate the dollar amount of misstatement for a class of transactions or an account balance.
Audit documentation (working papers)
Control deficiency
Generally accepted accounting principles (GAAP)
Classical variables sampling
20. 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.
General controls
Tolerable deviation rate
Generally accepted accounting principles (GAAP)
Material weakness
21. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Risk of incorrect rejection
Electronic (Internet) commerce
Misstatement
Analytical procedures
22. A letter that corroborates oral representations made to the auditor by management or by other auditors and documents the continued appropriateness of such representations.
Sampling unit
Representation letter
Errors
Control activities
23. 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.
Significant deficiency
Relevance of evidence
Business risks
Substantive strategy
24. The process of correcting a material weakness as part of management's assessment of the effectiveness of ICFR
Remediation
Internal Control
Substantive strategy
Sampling risk
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.
Errors
Other comprehensive basis of accounting
Independence
Statistical sampling
26. 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
Business risks
Fraud
Control deficiency
Risk of material misstatement
27. An audit inquiry sent to the client's attorneys in order to obtain or corroborate information about litifation - claims - and assessments.
Professional skepticism
Computer-assisted audit techniques (CAATs)
Legal letter
Audit documentation (working papers)
28. 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
Blank or zero-balance confirmations
Walkthrough
Statistical sampling
Sampling unit
29. Test to detect errors or fraud in individual transactions.
Substantive tests of transactions
Disclaimer of opinion
Closest reasonable estimate
Significant deficiency
30. 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.
Internal control
Audit sampling
Sampling unit
Risk of incorrect acceptance
31. 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.
Fraud
Allowance for sampling risk
Control risk
Financial Statement Assertions
32. Standards against which the quality of the auditor's performance is measured.
Substantive tests of transactions
Professional skepticism
Generally accepted auditing standards
Tests of details of account balances and disclosures
33. Expressed or implied representations by management regarding the recognitions - measurement - presentation - and disclosure of information in the financial statements and related disclosures.
Lapping
Board of directors
Assertions
Monitoring of controlsa
34. Physical examination of the tangible assets.
Confirmation
Lapping
Statements on Auditing Standards
Inspections of tangible assets
35. Expressed or implied representations by management that are reflected in the financial statement components.
Audit risk
Assertions
Business risks
Audit procedures
36. 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.
Accounting records
Scope of the audit
Business processes
Misstatement
37. A process that assess the quality of internal control performance over time.
Analytical procedures
Significant deficiency
Generally accepted accounting principles (GAAP)
Monitoring of controlsa
38. The extrapolation of sample results to the population; represents the auditors 'best estimate' of the misstatement in the sampling population
Control objective
Projected misstatement
Application controls
Unqualified audit report
39. The deviation rate that the auditor expects to exist in the population.
Expected population deviation rate
Reliance strategy
Nonstatistical sampling
Tolerable misstatement
40. Unintentional misstatements or omissions of amounts or disclosures.
Errors
Working papers
Sampling unit
Control activities
41. 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.
Significant deficiency
Blank or zero-balance confirmations
General controls
Audit strategy
42. The relevance of audit evidence refers to its relationship to the assertion or to the objective of the control being tested.
Material weakness
Assertions
Analytical procedures
Relevance of evidence
43. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Monitoring of controls
Closest reasonable estimate
Application controls
Analytical procedures
44. 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.
Control deficiency
Risk of incorrect acceptance
Corporate governance
Management advisory services
45. Computer programs that allow auditors to test computer files and databases.
Reliance strategy
Assertions
Computer-assisted audit techniques (CAATs)
ositive confirmation
46. Attribute-sampling techniques used to estimaed the dollar amount of misstatement for a class of transactions or an account balance.
Application controls
Desired confidence level
Monetary unit sampling
Statements on Auditing Standards
47. 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
Electronic (Internet) commerce
Substantive tests of transactions
Engagement letter
48. A subcommittee of the board of directors that is responsible for the financial reporting and disclosure process.
Audit committee
Control environment
Control deficiency
Sampling risk
49. Determination of the mathematical accuracy of documents or records.
Control deficiency
Recalculation
Inspections of records and documents
Analytical procedures
50. Intentional misstatements that can be classified as fraudulent financial reporting and/or misappropriation of assets.
Material Weakness
Fraud
Inherent risk
Business risks