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






2. 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






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






4. A confirmation request to which the recipient responds whether or not he or she agrees with the amount or information stated.






5. 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.






6. 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.






7. A letter that formalizes the contract between the auditor and the client and outlines the responsibilities of both parties.






8. 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.






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






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






11. 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.






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






13. 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.






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






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






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






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






18. 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






19. The auditor's opinion that the financial statements present fairly - in all material respects - in accordance with generally accepted accounting principles (or other comprehensive basis of accounting) - except for a material misstatement that does no






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






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






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






23. A violation of laws or governmental regulations.






24. 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.






25. Existing condition or set of circumstances involving uncertainty about a possible loss that will ultimately be resolved when some future event occurs or fails to occur.






26. 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.






27. 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.






28. 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






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






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






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






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






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






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






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






36. The magnitude of an omission or misstatement of accounting information that - in light of surrounding circumstances - makes it probable that the judgement of a reasonable person relying on the information would have been changed or influenced.






37. 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 -






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






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






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






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






42. 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.






43. A risk of material misstatement that is important enough to require special audit consideration.






44. 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






45. 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.






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. 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)






48. The risk that the sample supports the conclusion that the control is operating effectively when it is not or that the recorded account balance is not materially misstated when it is materially misstated.






49. Intentional misstatements that can be classified as fraudulent financial reporting and/or misappropriation of assets.






50. 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