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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.
Illegal act
Generally accepted auditing standards
Tests of details of account balances and disclosures
Engagement letter
2. Persons elected by the stockholders of a corporation to oversee management and to direct the affairs of the corporation.
Board of directors
Inspections of records and documents
Dual-purpose tests
Tolerable misstatement
3. Unintentional misstatements or omissions of amounts or disclosures.
General controls
Tests of details of account balances and disclosures
Errors
Audit sampling
4. 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.
Generally accepted auditing standards (GAAS)
Reliance strategy
Board of directors
Nonstatistical sampling
5. 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
Attest
Statements on Auditing Standards
Scope of the audit
Material Weakness
6. The process of covering a cash shortage by applying cash from one customer's accounts receivable against another customer's accounts receivable.
Sampling unit
Upper misstatement limit
Illegal acts
Lapping
7. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Control environment
Analytical procedures
Tests of details of account balances and disclosures
Qualified opinion
8. The diagnosticity of evidence; that is whether the type of evidence can be relied on to signal the true state of the assertion.
Control risk
Other information
Tolerable deviation rate
Reliability of evidence
9. The auditor's independent execution of procedures or controls that were originally performed as part of other entity's internal control - either manually or through the use of CAATs.
Positive confirmation
Reperformance
Control risk
Working papers
10. The relevance of audit evidence refers to its relationship to the assertion or to the objective of the control being tested.
Tests of details of account balances and disclosures
Relevance of evidence
Independence
Assertions
11. The uncertainty that results from sampling; the difference between the expected mean of the population and the tolerable deviation or misstatement.
Electronic (Internet) commerce
Control risk
Allowance for sampling risk
Classical variables sampling
12. 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.
Statistical sampling
Sampling risk
General controls
Audit Risk
13. Controls that related to the overall information processing environment and have a pervasive effect on the entity's computer operations
Statistical sampling
Sampling unit
Computer-assisted audit techniques (CAATs)
General controls
14. 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
Qualified opinion
Risk of incorrect rejection
Accounting records
Internal control
15. The amount of the planning materiality that is allocated to a financial statement account.
Misstatement
Allowance for sampling risk
Audit committee
Tolerable misstatement
16. 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.
Representation letter
Assertions
Engagement risk
Materiality
17. Seeking information of knowledgeable persons - both financial and nonfinancial - throughout the entity or outside the entity.
Internal Control
Internal control over financial reporting
Reperformance
Inquiry
18. 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.
Confirmation
Information asymmetry
Representation letter
Control objective
19. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data
Expected misstatement
Tolerable deviation rate
Analytical procedures
Tolerable misstatement
20. A transaction being traced by an auditor from origination through the entity's information system until it is reflected in the entity's financial reports; it encompasses the entire process of initiating - authorizing - recording - processing - and re
Control risk
Sampling unit
Entity-level controls
Walkthrough
21. A management letter is a report to management containing the auditors' recommendations for correcting any deficiencies disclosed by the auditors' consideration of internal control. The management letter also provides recommendations on where the comp
Reasonable assurance
Management letter
Control environment
Expected population deviation rate
22. 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
Tests of details of account balances and disclosures
Audit procedures
Control deficiency
Financial Statement Assertions
23. The auditor's principal record of the work performed and the basis for the conclusions in the auditor's report. It also facilitates the planning - performance - and supervision of the engagement and provides the basis for the review of the quality of
Audit documentation (working papers)
Sampling risk
Substantive procedures
Financial Statement Assertions
24. 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.
Dual dating
Confirmation
Qualified opinion
Material weakness
25. Tests to detect errors or fraud in individual transactions.
Assurance Services
Internal control over financial reporting
Substantive tests of transactions
Sampling risk
26. 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
Expected misstatement
Positive confirmation
Control objective
Other information
27. Test to detect errors or fraud in individual transactions.
Adverse opinion
Control environment
Assertions
Substantive tests of transactions
28. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Audit Risk
Control risk
Dual-purpose tests
Substantive strategy
29. The uncertainty that results from sampling; the difference between the expected mean of the population and the tolerable deviation or misstatement.
Analytical procedures
Financial Statement Assertions
Reliance strategy
Allowance for sampling risk
30. 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.
Attribute sampling
Control deficiency
Unqualified opinion
General controls
31. 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)
Information asymmetry
Risk of incorrect acceptance
Inherent risk
Unqualified audit report
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.
Independence
Risk of inccorect rejection
Tolerable deviation rate
Generally accepted auditing standards (GAAS)
33. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
Significant deficiency
General controls
Desired confidence level
Generally accepted auditing standards (GAAS)
34. 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
Accounting records
Significant risk
Confirmation
Blank or zero-balance confirmations
35. 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.
Material weakness
Reliance strategy
Control activities
Disclaimer of opinion
36. Attribute sampling techniques used to estimate the dollar amount of misstatement for a class of transactions or an account balance.
Adverse opinion
Nonsampling risk
Nonstatistical sampling
Monetary-unit sampling
37. Violations of laws or government regulations.
Illegal acts
Public accounting firm
Analytical procedures
Generally accepted auditing standards
38. Examination of internal or external records or documents that are in paper form - electronic form - or other media.
Assertions
Disclaimer of opinion
Inspections of records and documents
Control activities
39. An audit inquiry sent to the client's attorneys in order to obtain or corroborate information about litifation - claims - and assessments.
Audit documentation (working papers)
General controls
Dual-purpose tests
Legal letter
40. Basic unit containing the elements of the population to be sampled
Substantive tests of transactions
Material weakness
Sampling unit
Reliability of evidence
41. 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
Expected misstatement
Sampling risk
Engagement risk
Reasonable assurance
42. A system or code of conduct based on moral duties and obligations that indicates how an individual should behave.
Ethics
Risk of incorrect acceptance
Relevant Assertions
Public accounting firm
43. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting and correcting - material misstatements at the relevant assertion level.
Reperformance
Closest reasonable estimate
Audit sampling
Tests of controls
44. 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.
Reliance strategy
Substantive strategy
Inherent risk
Audit Risk
45. 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.
Significant deficiency
ateriality
Misstatement
Statistical sampling
46. Consulting services that may provide advice and assistance concerning an entity's organization - personnel - finances - operations - systems - or other activities
Sampling unit
Scope limitation
Management advisory services
Information asymmetry
47. 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
Unqualified opinion
Statistical sampling
Sampling unit
Substantive strategy
48. Expressed or implied representations by management that are reflected in the financial statement components.
Closest reasonable estimate
Financial statement assertions
Assertions
Monitoring of controls
49. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
Unqualified opinion
Tests of controls
Statistical sampling
Scope limitation
50. Computer programs that allow auditors to test computer files and databases.
Electronic (Internet) commerce
Tests of details of account balances and disclosures
Analytical procedures
Computer-assisted audit techniques (CAATs)