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






2. 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






3. 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






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






5. The extrapolation of sample results to the population; represents the auditors 'best estimate' of the misstatement in the sampling population






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






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






8. The risk that the entity's financial statements will contain a material misstatements whether caused by error or fraud.






9. Test of transactions that both evaluate the effectiveness of controls and detect monetary errors.






10. 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






11. The risk that the auditor may unknowingly fail to appropriately modify his or her opinion on financial statements that are materially misstated.






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






13. 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.






14. 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






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






16. Specific acts performed by the auditor in gathering evidence to determine if specific assertations are being met.






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






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






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






20. 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.






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






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)






23. 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.






24. A confirmation request to which the recipient responds whether or not he or she agrees with the amount or information stated.






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






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






27. 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






28. The concept that the manager generally has more information about the true financial position and results of operations of the entity than the absentee owner does.






29. Existing condition or set of circumstances involving uncertainty about a possible loss that will ultimately be resolved when some future event occurs or fails to occur.






30. 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 -






31. 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






32. 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.






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






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






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






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






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






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






39. Sampling used to estimate the proportion of a population that possesses a specified characteristic.






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






41. 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.






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






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






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






45. The transmission of business transactions over telecommunication networks.






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






47. An event occurring between the balance sheet date and the audit report release date - Type I - Type II






48. The risk that the auditor is exposed to financial loss or damage to his or her professional reputation from litigation - adverse publicity - or other events arising in connection wit financial statements audited and reported on.






49. A financial statement assertion that has a reasonable possibility of containing a misstatement or misstatements that would cause financial statements to be materially misstated.






50. A service when a practitioner is engaged to issue or does issue a report on a subject matter - or an assertion about subject matter - that is the responsibility of another party. Encompasses financial statement audits.







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