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






2. 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






3. 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.






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






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






6. The application of an audit procedure to less than 100 percent of the items within an account or class of transactions for the purpose of evaluating some characteristic of the balance or class.






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






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






9. The probability that the true but unknown measure of the characteristic of interest is within specified limits.






10. 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






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






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






13. 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.






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






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






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






17. A systematic process of (1) objectively obtaining an evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and (2) communicating the resu






18. 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.






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






20. 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






21. The oversight mechanisms in place to help ensure the proper stewardship over an entity's assets. Management and the board of directors play primary roles - and the independent auditor plays a key facilitating role.






22. 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






23. 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






24. 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.






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






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






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






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






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






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






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






32. The amount of misstatement that the auditor believes exists in the population.






33. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.






34. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.






35. Unintentional misstatements or omissions of amounts or disclosures.






36. Statements issued by the AICPA Auditing Standards Boards - considered as interpretations of the 10 GAAS statements.






37. 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






38. The total of the projected misstatement plus the allowance for sampling risk.






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






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






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






42. Physical examination of the tangible assets.






43. 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.






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






45. 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.






46. 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.






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






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






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






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