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Test your basic knowledge |
Auditing Vocab
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Study First
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. Persons elected by the stockholders of a corporation to oversee management and to direct the affairs of the corporation.
Board of directors
Reasonable assurance
Detection risk
Confidence bound
2. 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.
Sampling risk
Assurance Services
Disclaimer of opinion
Electronic data interchange
3. An event occurring between the balance sheet date and the audit report release date - Type I - Type II
Subsequent event
Reliability of evidence
Scope limitation
Dual dating
4. 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.
Significant deficiency
Control deficiency
Analytical procedures
Computer-assisted audit techniques (CAATs)
5. Expressed or implied representations by management regarding the recognitions - measurement - presentation - and disclosure of information in the financial statements and related disclosures.
Assertions
Walkthrough
Safeguarding of Assets
Desired confidence level
6. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
Tests of controls
Substantive procedures
Attest
Analytical procedures
7. The risk that the sample supports the conclusion that the recorded account balance is materially misstated when it is not materially misstated.
General controls
Risk of inccorect rejection
Risk of incorrect rejection
Misstatement
8. 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
ositive confirmation
Reliance strategy
Significant deficiency
Tests of controls
9. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statements accounts.
Information asymmetry
Projected misstatement
Reliance strategy
Confidence bound
10. The maximum deviation rate from a prescribed control that the auditor is willing to accept without altering the planned assessed level of control risk.
Internal control over financial reporting
Tolerable deviation rate
Reliance strategy
Errors
11. The uncertainty that results from sampling; the difference between the expected mean of the population and the tolerable deviation or misstatement.
Inquiry
Audit committee
Allowance for sampling risk
Management advisory services
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.
Analytical procedures
Substantive tests of transactions
General controls
Material weakness
13. 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
Attribute sampling
Monetary unit sampling
Risk of material misstatement
Sampling risk
14. Audit sampling that relies on the auditor's judgment to determine sample size - select the sample - and/or evaluate the results for the purpose of reaching a conclusion about the population.
Nonstatistical sampling
Computer-assisted audit techniques (CAATs)
Control objective
Illegal acts
15. 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.
Reasonable assurance
Illegal acts
Significant deficiency
Tests of controls
16. A letter that corroborates oral representations made to the auditor by management or by other auditors and documents the continued appropriateness of such representations.
Adverse opinion
Representation letter
Reasonable assurance
Management advisory services
17. 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.
Nonstatistical sampling
Analytical procedures
Scope limitation
Independence
18. A state of objectivity in fact and in appearance - including the absence of any significant conflicts of interest.
Electronic data interchange
Independence
Control deficiency
Classical variables sampling
19. Standards against which the quality of the auditor's performance is measured.
Tolerable deviation rate
Generally accepted auditing standards
Reasonable assurance
Electronic (Internet) commerce
20. 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.
Safeguarding of Assets
Confirmation
Application controls
Assertions
21. Specific acts performed as the auditor gathers evidence to determine if specific audit objectives are being met.
Dual-purpose tests
Audit procedures
Tolerable misstatement
Integrated audit
22. Attribute sampling techniques used to estimate the dollar amount of misstatement for a class of transactions or an account balance.
Remediation
Disclaimer of opinion
Monetary-unit sampling
Unqualified audit report
23. The use of normal distribution theory to estimate the dollar amount of misstatement for a class of transactions or an account balance.
Audit evidence
Classical variables sampling
Reasonable assurance
Entity-level controls
24. Expressed or implied representations by management that are reflected in the financial statement components.
Assertions
Positive confirmation
Audit evidence
Expected population deviation rate
25. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
Management letter
Analytical procedures
General controls
Relevance of evidence
26. Specific acts performed by the auditor in gathering evidence to determine if specific assertions are met.
Risk of incorrect acceptance
Inspections of tangible assets
Control deficiency
Audit procedures
27. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
Recalculation
General controls
Materiality
Monitoring of controls
28. A violation of laws or governmental regulations.
Audit strategy
Illegal act
Computer-assisted audit techniques (CAATs)
Information asymmetry
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.
Reasonable assurance
Tests of details of account balances and disclosures
Substantive strategy
Sampling unit
30. A system or code of conduct based on moral duties and obligations that indicates how an individual should behave.
Closest reasonable estimate
Attribute sampling
Ethics
Inspections of tangible assets
31. 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
Working papers
Reasonable assurance
Business risks
Internal Control
32. 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 -
Reliability of evidence
Internal control over financial reporting
Control risk
Risk of incorrect acceptance
33. A letter that corroborates oral representations made to the auditor by management or by other auditors and documents the continued appropriateness of such representations.
Monetary unit sampling
Substantive tests of transactions
Control activities
Representation letter
34. 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.
Information asymmetry
Reliance strategy
Relevant Assertions
Reliance strategy
35. A confirmation request to which the recipient responds only if the amount or information stated is incorrect.
Reperformance
Other information
Negative confirmation
Assertions
36. An organization created to provide professional accounting-related services - including auditing. Usually formed as a proprietorship or as a form of partnership.
Public accounting firm
Scope limitation
Desired confidence level
Nonstatistical sampling
37. 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)
Internal control over financial reporting
Application controls
Control deficiency
Unqualified audit report
38. Basic unit containing the elements of the population to be sampled
Sampling unit
Tolerable misstatement
Engagement quality review
Internal Control
39. 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.
Audit procedures
Generally accepted accounting principles (GAAP)
Electronic (Internet) commerce
Classical variables sampling
40. Expressed or implied representations by management regarding recognition - measurement - presentation - and disclosure of information in the financial statements.
Significant deficiency
Sampling unit
Assertions
ositive confirmation
41. 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.
Engagement quality review
Risk of incorrect acceptance
Risk of incorrect rejection
Sampling unit
42. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.
Blank or zero-balance confirmations
Tests of details of account balances and disclosures
Risk of incorrect acceptance
Material weakness
43. 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.
Substantive tests of transactions
Representation letter
Significant deficiency
Reasonable assurance
44. 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.
Nonsampling risk
Statistical sampling
ateriality
Substantive strategy
45. A subcommittee of the board of directors that is responsible for the financial reporting and disclosure process.
Projected misstatement
Audit committee
Assertions
Tests of controls
46. 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)
Management letter
Reporting
Substantive strategy
Internal control over financial reporting
47. 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.
Materiality
Electronic (Internet) commerce
Nonstatistical sampling
Tests of details of account balances and disclosures
48. 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.
Generally accepted auditing standards
Analytical procedures
Materiality
Control environment
49. Intentional misstatements that can be classified as fraudulent financial reporting and/or misappropriation of assets.
Engagement quality review
Tests of details of account balances and disclosures
Sampling risk
Fraud
50. A process that assesses the quality of internal control performance over time.
Generally accepted accounting principles (GAAP)
Monitoring of controls
Integrated audit
Risk of incorrect acceptance