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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. A violation of laws or governmental regulations.






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






3. Unintentional misstatements or omissions of amounts or disclosures.






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.






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






6. The process of covering a cash shortage by applying cash from one customer's accounts receivable against another customer's accounts receivable.






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






8. The diagnosticity of evidence; that is whether the type of evidence can be relied on to signal the true state of the assertion.






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.






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






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






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.






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






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






15. The amount of the planning materiality that is allocated to a financial statement account.






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.






17. Seeking information of knowledgeable persons - both financial and nonfinancial - throughout the entity or outside the entity.






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.






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






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






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






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






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






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.






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






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






27. Test to detect errors or fraud in individual transactions.






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






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






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.






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)






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






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






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.






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






37. Violations of laws or government regulations.






38. Examination of internal or external records or documents that are in paper form - electronic form - or other media.






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






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






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






42. A system or code of conduct based on moral duties and obligations that indicates how an individual should behave.






43. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting and correcting - material misstatements at the relevant assertion level.






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.






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.






46. Consulting services that may provide advice and assistance concerning an entity's organization - personnel - finances - operations - systems - or other activities






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






48. Expressed or implied representations by management that are reflected in the financial statement components.






49. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.






50. Computer programs that allow auditors to test computer files and databases.