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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 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






2. Examination of internal or external records or documents that are in paper form - electronic form - or other media.






3. 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.






4. 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.






5. Ten broad statements guiding the conduct of financial statement auditing.






6. 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.






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






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






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






10. A confirmation request to which the recipient responds only if the amount or information stated is incorrect.






11. Specific acts performed as the auditor gathers evidence to determine if specific audit objectives are being met.






12. 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.






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






14. Attribute-sampling techniques used to estimaed the dollar amount of misstatement for a class of transactions or an account balance.






15. 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.






16. 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.






17. 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.






18. 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.






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






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






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






22. 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






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






24. The auditor's independent execution of procedures or controls that were originally performed as part of other entity's internal control - either manually or through the use of CAATs.






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






26. 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






27. The process of covering a cash shortage by applying cash from one customer's accounts receivable against another customer's accounts receivable.






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






29. 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.






30. 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.






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






32. 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.






33. 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






34. 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.






35. 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.






36. 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.






37. 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.






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






39. The individual member of the population being sampled.






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






41. 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.






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






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






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






45. 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.






46. A risk of material misstatement that is important enough to require special audit consideration.






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






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






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






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