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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 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 -






2. 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.






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






4. The maximum deviation rate from a prescribed control that the auditor is willing to accept without altering the planned assessed level of control risk.






5. The amount of the planning materiality that is allocated to a financial statement account.






6. The auditor's decision not to rely on the entity's controls and to audit the related financial statement account by relying more on substantive procedures.






7. An audit of both financial statements and internal control over financial reporting - provided by the external auditor. Required for public companies.






8. 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.






9. Expressed or implied representations by management regarding recognition - measurement - presentation - and disclosure of information in the financial statements.






10. 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.






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






12. A state of objectivity in fact and in appearance - including the absence of any significant conflicts of interest.






13. 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.






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






15. 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






16. Expressed or implied representations by management regarding the recognitions - measurement - presentation - and disclosure of information in the financial statements and related disclosures.






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






18. 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.






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






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






21. 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.






22. 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.






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






24. 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






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






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






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






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






29. 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






30. 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)






31. The auditor's plan for the expected conduct - organization - and staffing of the audit.






32. 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.






33. 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






34. 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






35. Physical examination of the tangible assets.






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






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






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






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






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






41. 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






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






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






44. 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.






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






46. 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






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






48. Issued when auditors do not express an opinion on the fairness of the entity's financial statements. Can be issued for pervasive going-concern uncertainties - pervasive scope limitations - and situations in which the auditors are not independent.






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






50. 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.