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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. The policies and procedures that help ensure that management's directives are carried out.
Electronic (Internet) commerce
Control activities
Relevance of evidence
Control risk
2. A confirmation request to which the recipient responds only if the amount or information stated is incorrect.
Material Weakness
Audit strategy
Negative confirmation
Risk assessment
3. 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.
Nonstatistical sampling
Application controls
Control risk
Entity-level controls
4. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Confirmation
Statements on Auditing Standards
Illegal acts
Control risk
5. 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.
Confirmation
Materiality
Significant deficiency
Illegal acts
6. 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.
Application controls
Generally accepted auditing standards
Professional skepticism
Risk of incorrect acceptance
7. Computer programs that allow auditors to test computer files and databases.
Statistical sampling
Financial statement assertions
Analytical procedures
Computer-assisted audit techniques (CAATs)
8. 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
Walkthrough
Nonstatistical sampling
Reporting
Audit evidence
9. The amount of misstatement that the auditor believes exists in the population.
Expected misstatement
Assertions
Control risk
Substantive tests of transactions
10. An event occurring between the balance sheet date and the audit report release date - Type I - Type II
Expected population deviation rate
Audit risk
Substantive tests of transactions
Subsequent event
11. Papers that document the evidence gathered by auditors to show the work they have done - the methods and procedures they have followed - and the conclusions they have developed in an audit of financial statements or other type of engagement.
Working papers
Materiality
Sampling risk
Other information
12. 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.
Reporting
Tests of controls
Confirmation
Detection risk
13. Statements issued by the AICPA Auditing Standards Boards - considered as interpretations of the 10 GAAS statements.
Nonsampling risk
Tests of details of account balances and disclosures
Statements on Auditing Standards
Control activities
14. 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.
Illegal acts
Material weakness
Tests of controls
Substantive tests of transactions
15. The method by which an entity's board of 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 efficie
Internal control
Monetary-unit sampling
Reliance strategy
Contingent liability
16. Unintentional misstatements or omissions of amounts or disclosures.
Financial statement assertions
Nonstatistical sampling
Errors
Significant account or disclosure
17. The process of correcting a material weakness as part of management's assessment of the effectiveness of ICFR
Remediation
Representation letter
Computer-assisted audit techniques (CAATs)
Blank or zero-balance confirmations
18. 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.
Generally accepted accounting principles (GAAP)
Tests of details of account balances and disclosures
Safeguarding of Assets
Engagement risk
19. When a subsequent event disclosed in the financial statements occurs after the date of the report but before the issuance of the related financial statements - the auditor may use dual dating. The auditor may use the original date of the report excep
Audit sampling
Dual dating
Desired confidence level
Control environment
20. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.
Assurance Services
General controls
Tests of details of account balances and disclosures
Expected misstatement
21. 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
Engagement quality review
Audit sampling
Sampling risk
ositive confirmation
22. 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)
Unqualified audit report
Control risk
Audit committee
General controls
23. An organization created to provide professional accounting-related services - including auditing. Usually formed as a proprietorship or as a form of partnership.
ateriality
Recalculation
Reporting
Public accounting firm
24. The risk that the entity's financial statements will contain a material misstatements whether caused by error or fraud.
Risk of inccorect rejection
Audit sampling
Risk of material misstatement
Closest reasonable estimate
25. Standards against which the quality of the auditor's performance is measured.
Risk of incorrect rejection
Allowance for sampling risk
Public accounting firm
Generally accepted auditing standards
26. The magnitude of an omission or misstatement of accounting information that - in light of surrounding circumstances - makes it probable that the judgement of a reasonable person relying on the information would have been changed or influenced.
Computer-assisted audit techniques (CAATs)
Electronic (Internet) commerce
Disclaimer of opinion
Materiality
27. The risk that the auditor may unknowingly fail to appropriately modify the opinion on materially misstated financial statements.
Audit risk
Reliance strategy
Monitoring of controls
Reporting
28. The auditor's opinion that the financial statements do not present fairly in accordance with generally accepted accounting principles (or other comprehensive basis of accounting) due to a pervasively material misstatement.
Assertions
Audit procedures
General controls
Adverse opinion
29. A process that assesses the quality of internal control performance over time.
Control risk
Electronic data interchange
Monitoring of controls
Sampling unit
30. Controls that related to the overall information processing environment and have a pervasive effect on the entity's computer operations
Tolerable deviation rate
General controls
Analytical procedures
Materiality
31. 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.
General controls
Tests of controls
Risk of incorrect rejection
Generally accepted accounting principles (GAAP)
32. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting and correcting - material misstatements at the relevant assertion level.
Significant account or disclosure
Audit committee
Assertions
Tests of controls
33. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
Electronic (Internet) commerce
Contingent liability
Recalculation
General controls
34. 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.
Scope limitation
Lapping
Recalculation
Audit sampling
35. Substantive tests that concentrate on the details of items contained in the account balance and disclosures.
Tests of controls
Risk of incorrect acceptance
Analytical procedures
Tests of details of account balances and disclosures
36. 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)
Monitoring of controls
Reporting
Computer-assisted audit techniques (CAATs)
Remediation
37. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
Analytical procedures
Positive confirmation
Electronic data interchange
General controls
38. The risk that the auditor will not detect a material misstatement that exists in the financial statements
Relevance of evidence
Detection risk
Engagement quality review
General controls
39. The amount of the planning materiality that is allocated to a financial statement account.
Confirmation
Errors
Tolerable misstatement
Inspections of tangible assets
40. The susceptibility of an assertion to material misstatement - assuming no related controls
Financial statement assertions
Confirmation
Inherent risk
Control environment
41. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Analytical procedures
Reasonable assurance
Engagement letter
Classical variables sampling
42. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Application controls
Risk of incorrect rejection
Disclaimer of opinion
Generally accepted auditing standards (GAAS)
43. Ten broad statements guiding the conduct of financial statement auditing.
Integrated audit
Generally accepted auditing standards (GAAS)
Tolerable misstatement
Statistical sampling
44. 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
Reasonable assurance
Sampling unit
Significant deficiency
Contingent liability
45. A confirmation request to which the recipient responds whether or not he or she agrees with the amount or information stated.
Analytical procedures
Confidence bound
ositive confirmation
Tests of controls
46. The risk that the auditor may unknowingly fail to appropriately modify his or her opinion on financial statements that are materially misstated.
Audit documentation (working papers)
Audit Risk
Engagement quality review
Remediation
47. An audit inquiry sent to the client's attorneys in order to obtain or corroborate information about litifation - claims - and assessments.
Generally accepted accounting principles (GAAP)
Legal letter
Adverse opinion
Control risk
48. Consulting services that may provide advice and assistance concerning an entity's organization - personnel - finances - operations - systems - or other activities
Audit committee
Management advisory services
Tests of controls
Monitoring of controls
49. 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
Risk assessment
Tests of controls
Audit committee
Material weakness
50. Tests to detect errors or fraud in individual transactions.
Engagement risk
Desired confidence level
Control deficiency
Substantive tests of transactions