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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. A deficiency - or combination of deficiencies - in internal control - such that there is a reasonable possibility that a material misstatememnt of the entity's financial statements will not be prevent - or detected and corrected on a timely basis.






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






3. A process that assesses the quality of internal control performance over time.






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






5. 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






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






7. 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.






8. Determination of the mathematical accuracy of documents or records.






9. The process of correcting a material weakness as part of management's assessment of the effectiveness of ICFR






10. The method by which an entity's boardof 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 efficien






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






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






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






14. 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.






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






16. 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






17. Physical examination of the tangible assets.






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. 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






20. 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






21. Test to detect errors or fraud in individual transactions.






22. 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.






23. 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.






24. The susceptibility of an assertion to material misstatement - assuming no related controls






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






26. A violation of laws or governmental regulations.






27. Violations of laws or government regulations.






28. 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.






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






30. 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.






31. 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






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. 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






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






35. The concept that an audit done in accordance with auditing standards may fail to detect a material misstatement in a client's financial statements. In an auditing context this term has been defined to mean a high - but not absolute level of assurance






36. 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






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






38. Unintentional misstatements or omissions of amounts or disclosures.






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






40. 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






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






43. 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






44. 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.






45. 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.






46. Processes implemented by management to achieve entity objectives. Business processes are typically organized into the following categories: revenue - purchasing. human resource management - inventory management - and financing processes






47. A confirmation request on which the recipient fills in the amount or furnishes the information requested.






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






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






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