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Test your basic knowledge |
Auditing Vocab
Start Test
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. A violation of laws or governmental regulations.
Legal letter
Illegal act
Application controls
Inspections of tangible assets
2. 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.
Computer-assisted audit techniques (CAATs)
Classical variables sampling
Scope limitation
Control deficiency
3. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting and correcting - material misstatements at the relevant assertion level.
Statistical sampling
Tests of controls
Risk of incorrect acceptance
Closest reasonable estimate
4. The process of correcting a material weakness as part of management's assessment of the effectiveness of ICFR
Engagement quality review
Remediation
Control risk
Control deficiency
5. The method by which an entity's boardof 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 efficien
Monetary-unit sampling
General controls
Internal Control
Audit procedures
6. Examination of internal or external records or documents that are in paper form - electronic form - or other media.
Desired confidence level
Significant deficiency
Inspections of records and documents
Control activities
7. The process of covering a cash shortage by applying cash from one customer's accounts receivable against another customer's accounts receivable.
Substantive strategy
Lapping
Audit procedures
Analytical procedures
8. 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.
Representation letter
Audit committee
Audit procedures
Reasonable assurance
9. The use of normal distribution theory to estimate the dollar amount of misstatement for a class of transactions or an account balance.
Classical variables sampling
Fraud
Analytical procedures
Blank or zero-balance confirmations
10. Controls that have a pervasive effect on the entity's system of internal control such as controls related to the control environment; controls over management override; the company's risk assessment process; centralized processing and controls - incl
Inherent risk
Entity-level controls
Scope of the audit
Confirmation
11. 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.
Nonsampling risk
Control environment
Substantive strategy
Tests of details of account balances and disclosures
12. Specific acts performed as the auditor gathers evidence to determine if specific audit objectives are being met.
Fraud
Audit procedures
Audit strategy
Risk of incorrect rejection
13. Violations of laws or government regulations.
Illegal acts
Projected misstatement
Dual-purpose tests
Control environment
14. Attribute sampling techniques used to estimate the dollar amount of misstatement for a class of transactions or an account balance.
Fraud
Tests of controls
Monetary-unit sampling
Audit Evidence
15. The policies and procedures that help ensure that management's directives are carried out.
Control activities
Assurance Services
Inherent risk
General controls
16. 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.
Confirmation
Risk of incorrect acceptance
Dual-purpose tests
Control risk
17. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statement accounts.
Relevant Assertions
Sampling unit
Reliance strategy
Tests of controls
18. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Application controls
Professional skepticism
Board of directors
Analytical procedures
19. A range of acceptable amounts or a precisely determined point estimate for an estimate (eg. uncollectible receivables) - if that is a better estimate than any other amount
Closest reasonable estimate
Application controls
Internal control over financial reporting
Control deficiency
20. 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
Confidence bound
Significant account or disclosure
Audit committee
Generally accepted auditing standards
21. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data
Illegal act
Analytical procedures
Reporting
Material Weakness
22. 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.
Illegal acts
Allowance for sampling risk
Nonstatistical sampling
Substantive tests of transactions
23. The risk that the sample supports the conclusion that the recorded account balance is materially misstated when it is not materially misstated.
Representation letter
Control risk
Blank or zero-balance confirmations
Risk of inccorect rejection
24. 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
Audit sampling
Statistical sampling
Audit sampling
Standards of the PCAOB
25. Financial statements prepared under regulatory - tax - cash basis - or other definitive criteria having substantial support.
Audit procedures
Other comprehensive basis of accounting
Risk of incorrect acceptance
Control deficiency
26. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Public accounting firm
Audit procedures
Control risk
Entity-level controls
27. 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
Significant account or disclosure
Business processes
Engagement quality review
Substantive strategy
28. 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.
Assertions
Financial Statement Assertions
Sampling unit
Subsequent event
29. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
Application controls
Tests of controls
ositive confirmation
Dual dating
30. 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.
Application controls
Internal Control
Corporate governance
Ethics
31. The policies and procedures that help ensure that management's directives are carried out.
Assertions
Control activities
Internal control
Audit risk
32. 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.
Inquiry
Risk of incorrect acceptance
Nonstatistical sampling
Reliance strategy
33. 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
Management letter
Representation letter
Corporate governance
Engagement quality review
34. 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 Risk
Generally accepted accounting principles (GAAP)
Inspections of tangible assets
Audit sampling
35. A process that assess the quality of internal control performance over time.
Computer-assisted audit techniques (CAATs)
Standards of the PCAOB
Monitoring of controlsa
Analytical procedures
36. 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
Control deficiency
Significant account or disclosure
Audit committee
Expected population deviation rate
37. 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.
Reperformance
Substantive strategy
Audit strategy
Working papers
38. Statements issued by the AICPA Auditing Standards Boards - considered as interpretations of the 10 GAAS statements.
Substantive strategy
Nonstatistical sampling
Confirmation
Statements on Auditing Standards
39. A confirmation request to which the recipient responds only if the amount or information stated is incorrect.
Projected misstatement
Negative confirmation
Significant risk
Monetary-unit sampling
40. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Inspections of tangible assets
Information asymmetry
Control risk
Substantive tests of transactions
41. Seeking information of knowledgeable persons - both financial and nonfinancial - throughout the entity or outside the entity.
Business risks
Representation letter
Inquiry
Control activities
42. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Internal control
Application controls
Illegal acts
Nonstatistical sampling
43. 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.
Dual dating
Significant deficiency
Risk of incorrect rejection
Observation
44. Independent professional services that improve the quality of information - or its context - for decision makers. Encompasses attest services and financial statement audits.
Assurance Services
Business processes
Safeguarding of Assets
Statistical sampling
45. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Audit procedures
Control deficiency
Detection risk
Analytical procedures
46. A letter that corroborates oral representations made to the auditor by management or by other auditors and documents the continued appropriateness of such representations.
Representation letter
Allowance for sampling risk
Walkthrough
Substantive strategy
47. Tests to detect errors or fraud in individual transactions.
Control environment
Application controls
Control environment
Substantive tests of transactions
48. Test of transactions that both evaluate the effectiveness of controls and detect monetary errors.
Working papers
Relevance of evidence
Dual-purpose tests
Legal letter
49. Ten broad statements guiding the conduct of financial statement auditing.
Nonstatistical sampling
Statements on Auditing Standards
Significant deficiency
Generally accepted auditing standards (GAAS)
50. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.
Statements on Auditing Standards
Materiality
Audit Evidence
Tests of details of account balances and disclosures