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






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






3. Basic unit containing the elements of the population to be sampled






4. 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.






5. The deviation rate that the auditor expects to exist in the population.






6. Attribute sampling techniques used to estimate the dollar amount of misstatement for a class of transactions or an account balance.






7. 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.






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






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






11. All the information used by the auditor in arriving at the conclusions on which the audit opinion is based; includes the information contained in the accounting records underlying the financial statements and other information






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






13. Attribute-sampling techniques used to estimaed the dollar amount of misstatement for a class of transactions or an account balance.






14. Persons elected by the stockholders of a corporation to oversee management and to direct the affairs of the corporation.






15. 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






16. 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.






17. A deficiency - or combination of deficiencies - in internal control - such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented - or detected and corrected - on a timely basis.






18. 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.






19. Audit procedures performed to test material misstatements in an account balance - transaction class - or disclosure component of the financial statements.






20. A committee consisting of members of the board of directors - charged with overseeing the entity's system of internal control over financial reporting - internal and external auditors - and financial reporting process. Members typically must be indep






21. A process that assesses the quality of internal control performance over time.






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






23. 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.






24. 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.






25. The use of normal distribution theory to estimate the dollar amount of misstatement for a class of transactions or an account balance.






26. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.






27. 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.






28. Audit evidence that includes minutes of meetings; confirmations from third parties; industry analysts' reports; comparable data about competitors (benchmarking); controls manuals; information obtained by the auditor from such audit procedures as inqu






29. 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.






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






31. A financial statement assertion that has a reasonable possibility of containing a misstatement or misstatements that would cause financial statements to be materially misstated.






32. Business transactions between individuals and organizations that occur without proper documents - using computers - and telecommunication networks.






33. 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.






34. 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






35. An audit inquiry sent to the client's attorneys in order to obtain or corroborate information about litifation - claims - and assessments.






36. 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.






37. 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.






38. Specific acts performed as the auditor gathers evidence to determine if specific audit objectives are being met.






39. 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






40. The transmission of business transactions over telecommunication networks.






41. 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.






42. Ten broad statements guiding the conduct of financial statement auditing.






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






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. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.






46. 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






47. The process of correcting a material weakness as part of management's assessment of the effectiveness of ICFR






48. 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






49. The risk that the auditor will not detect a material misstatement that exists in the financial statements






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