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Test your basic knowledge |
Auditing Vocab
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Subject
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business-skills
Instructions:
Answer 50 questions in 15 minutes.
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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. 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.
Legal letter
Engagement quality review
Inquiry
Scope of the audit
2. Audit procedures performed to test material misstatements in an account balance - transaction class - or disclosure component of the financial statements.
Application controls
Analytical procedures
Substantive procedures
Statistical sampling
3. A confirmation request on which the recipient fills in the amount or furnishes the information requested.
Nonstatistical sampling
Allowance for sampling risk
Relevant Assertions
Blank or zero-balance confirmations
4. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Significant risk
Application controls
Ethics
Audit procedures
5. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statement accounts.
Monetary unit sampling
Attest
Reliance strategy
Business processes
6. 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.
Attest
Control risk
Public accounting firm
Observation
7. Statements issued by the AICPA Auditing Standards Boards - considered as interpretations of the 10 GAAS statements.
Statements on Auditing Standards
Substantive tests of transactions
Blank or zero-balance confirmations
Material Weakness
8. A letter that corroborates oral representations made to the auditor by management or by other auditors and documents the continued appropriateness of such representations.
Reperformance
Reasonable assurance
Representation letter
Tests of controls
9. The risk that the auditor is exposed to financial loss or damage to his or her professional reputation from litigation - adverse publicity - or other events arising in connection wit financial statements audited and reported on.
Contingent liability
Desired confidence level
Engagement risk
Electronic (Internet) commerce
10. 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
Sampling risk
Professional skepticism
Representation letter
Independence
11. An event occurring between the balance sheet date and the audit report release date - Type I - Type II
Subsequent event
Walkthrough
Confirmation
Inspections of tangible assets
12. 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
Contingent liability
Control activities
Reliance strategy
Misstatement
13. A confirmation request to which the recipient responds only if the amount or information stated is incorrect.
Negative confirmation
Confirmation
Positive confirmation
Reasonable assurance
14. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
Ethics
General controls
General controls
Tests of controls
15. 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
Generally accepted accounting principles (GAAP)
Material weakness
Statistical sampling
Inspections of tangible assets
16. 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.
Control environment
Confidence bound
Audit procedures
Analytical procedures
17. Controls that related to the overall information processing environment and have a pervasive effect on the entity's computer operations
Computer-assisted audit techniques (CAATs)
General controls
Professional skepticism
Application controls
18. 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
Application controls
Independence
Accounting records
Significant deficiency
19. 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.
Materiality
Qualified opinion
Substantive tests of transactions
Nonstatistical sampling
20. Test to detect errors or fraud in individual transactions.
Substantive tests of transactions
Reasonable assurance
Generally accepted auditing standards
Nonstatistical sampling
21. 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
Control objective
Audit committee
Legal letter
Business risks
22. 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.
Statistical sampling
Audit committee
Reliance strategy
Nonstatistical sampling
23. A deficiency - or combination of deficiencies - that results in a reasonable possibility that a material misstatement of the company's annual or interim financial stsatements will not be prevented or detected on a timely basis
Control environment
Audit committee
Material Weakness
Reliance strategy
24. 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.
Audit sampling
Engagement letter
Tests of controls
Other information
25. 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.
Electronic (Internet) commerce
Analytical procedures
Nonsampling risk
Material weakness
26. Process of watching a process or procedure being performed by others.
Unqualified audit report
Observation
Illegal acts
Subsequent event
27. The maximum deviation rate from a prescribed control that the auditor is willing to accept without altering the planned assessed level of control risk.
Electronic data interchange
Blank or zero-balance confirmations
Misstatement
Tolerable deviation rate
28. A process that assesses the quality of internal control performance over time.
Reporting
Generally accepted auditing standards
Monitoring of controls
Computer-assisted audit techniques (CAATs)
29. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.
Engagement risk
Risk of incorrect rejection
Control environment
Tests of details of account balances and disclosures
30. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Control risk
Substantive procedures
Material weakness
Audit risk
31. Determination of the mathematical accuracy of documents or records.
Recalculation
Risk of inccorect rejection
Reasonable assurance
Allowance for sampling risk
32. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statement accounts.
Sampling risk
Public accounting firm
Reliance strategy
Nonsampling risk
33. 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.
Audit procedures
Audit committee
Nonsampling risk
Financial statement assertions
34. Attribute sampling techniques used to estimate the dollar amount of misstatement for a class of transactions or an account balance.
Detection risk
Generally accepted accounting principles (GAAP)
Monetary-unit sampling
Computer-assisted audit techniques (CAATs)
35. 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
Audit Risk
Dual dating
Electronic (Internet) commerce
Reliance strategy
36. An account or disclosure is significant if there is a reasonable possibility that the account or disclosure could contain a misstatement that - individually or when aggregated with others - has a material effect on the financial statements - consider
Reporting
Lapping
Significant account or disclosure
Material weakness
37. 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
Internal control over financial reporting
Inspections of records and documents
Significant deficiency
Classical variables sampling
38. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Tolerable deviation rate
Control risk
Tests of controls
Reasonable assurance
39. Tests to detect errors or fraud in individual transactions.
Adverse opinion
Sampling risk
Electronic (Internet) commerce
Substantive tests of transactions
40. Business transactions between individuals and organizations that occur without paper documents - using computers and telecommunication networks.
Electronic (Internet) commerce
Recalculation
General controls
Audit procedures
41. Those policies and procedures that provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition - use - or disposition of the company's assets that could have a material effect on the financial statements
Safeguarding of Assets
Reasonable assurance
Risk assessment
Control activities
42. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
Monetary unit sampling
Risk of inccorect rejection
Attest
General controls
43. The auditor's opinion that the financial statements do not present fairly in accordance with generally accepted accounting principles (or other comprehensive basis of accounting) due to a pervasively material misstatement.
Detection risk
Adverse opinion
Attest
Tests of controls
44. The deviation rate that the auditor expects to exist in the population.
Upper misstatement limit
Attest
Control deficiency
Expected population deviation rate
45. 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.
Generally accepted auditing standards
Disclaimer of opinion
Information asymmetry
Adverse opinion
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
Safeguarding of Assets
Internal control
Monetary-unit sampling
Inspections of records and documents
47. Basic unit containing the elements of the population to be sampled
Tests of controls
Audit procedures
Misstatement
Sampling unit
48. 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)
Tests of controls
Qualified opinion
Control environment
Unqualified audit report
49. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
General controls
Monitoring of controls
Electronic data interchange
Application controls
50. The risk that the auditor may unknowingly fail to appropriately modify his or her opinion on financial statements that are materially misstated.
Assertions
Audit Risk
Control environment
Allowance for sampling risk
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