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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. The identification - analysis - and management of risks relevant to the preparation of financial statements that are fairly presented in conformity with GAAP.






2. 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






3. 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.






4. 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






5. The diagnosticity of evidence; that is whether the type of evidence can be relied on to signal the true state of the assertion.






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






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






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






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






10. 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






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






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






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






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






15. The process of obtaining and evaluation a direct communication from a third party in response to a request for information about a particular item affecting financial statement assertions.






16. 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.






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






18. 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)






19. 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.






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






21. Expressed or implied representations by management that are reflected in the financial statement components.






22. 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






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






24. 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






25. 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.






26. 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.






27. A process designed by - or under the supervision of - the company's principal executive and principal financial officers - or persons performing similar functions - and effected by the company's board of directors - management - and other personnel -






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






29. The risk that the auditor may unknowingly fail to appropriately modify the opinion on materially misstated financial statements.






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






31. A violation of laws or governmental regulations.






32. Violations of laws or government regulations.






33. The amount of the planning materiality that is allocated to a financial statement account.






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






35. 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






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






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






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






39. 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






40. 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






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






42. Unintentional misstatements or omissions of amounts or disclosures.






43. The amount of the planning materiality that is allocated to a financial statement account.






44. Those policies and procedures that provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition - use - or disposition of the company's assets that could have a material effect on the financial statements






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






46. 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.






47. 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.






48. The transmission of business transactions over telecommunication networks.






49. 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.






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