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Test your basic knowledge |
Auditing Vocab
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Subject
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business-skills
Instructions:
Answer 50 questions in 15 minutes.
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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 risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Control risk
Expected population deviation rate
Allowance for sampling risk
Significant risk
2. A process that assesses the quality of internal control performance over time.
Risk of incorrect acceptance
Tests of controls
Control risk
Monitoring of controls
3. Risks resulting from significant conditions - events - circumstances - and actions or inactions that could adversely affect management's ability to execute its strategies and to achieve its objectives - or through the setting of inappropriate objecti
Business risks
Inspections of tangible assets
Analytical procedures
Upper misstatement limit
4. 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.
Audit Evidence
General controls
Material weakness
Substantive strategy
5. Statements issued by the AICPA Auditing Standards Boards - considered as interpretations of the 10 GAAS statements.
Nonsampling risk
Other comprehensive basis of accounting
Other information
Statements on Auditing Standards
6. Computer programs that allow auditors to test computer files and databases.
Electronic (Internet) commerce
Computer-assisted audit techniques (CAATs)
Unqualified audit report
Errors
7. 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
Control deficiency
Control activities
Safeguarding of Assets
Engagement quality review
8. Specific acts performed by the auditor in gathering evidence to determine if specific assertions are met.
Audit procedures
Expected misstatement
Substantive tests of transactions
Expected population deviation rate
9. 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.
Allowance for sampling risk
Analytical procedures
Tests of details of account balances and disclosures
Materiality
10. 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 sampling
Substantive tests of transactions
Significant risk
Audit committee
11. 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.
Material weakness
Dual dating
Control deficiency
Nonstatistical sampling
12. An audit of both financial statements and internal control over financial reporting - provided by the external auditor. Required for public companies.
Management letter
Significant deficiency
Integrated audit
Nonsampling risk
13. 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.
Materiality
Management letter
Dual dating
Significant deficiency
14. A control deficiency - or combination of control deficiencies - that adversely effects the entity's ability to initate - authorize - record - process - or report external financial data reliably in accordance with GAAP such that there is more than a
Attest
Material weakness
Significant deficiency
Analytical procedures
15. Standards regarding the conduct of financial statement auditing for public companies. Currently - consist primarily of standards and statements established by the AICPA's Auditing Standards Board - as these statements and standards were adopted by th
Control activities
Sampling unit
Control environment
Standards of the PCAOB
16. The identification - analysis - and management of risks relevant to the preparation of financial statements that are fairly presented in conformity with GAAP.
Engagement letter
Risk assessment
Confirmation
Application controls
17. 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)
Monitoring of controlsa
Management letter
Unqualified audit report
Audit Evidence
18. 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
Significant account or disclosure
Statistical sampling
Inherent risk
Monitoring of controlsa
19. Unintentional misstatements or omissions of amounts or disclosures.
Tests of details of account balances and disclosures
Assertions
Errors
Computer-assisted audit techniques (CAATs)
20. 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
Materiality
Material Weakness
Illegal acts
Desired confidence level
21. A letter that corroborates oral representations made to the auditor by management or by other auditors and documents the continued appropriateness of such representations.
Inherent risk
Representation letter
Audit sampling
Substantive tests of transactions
22. Persons elected by the stockholders of a corporation to oversee management and to direct the affairs of the corporation.
Board of directors
Subsequent event
Reliance strategy
Generally accepted auditing standards
23. Issued when auditors do not express an opinion on the fairness of the entity's financial statements. Can be issued for pervasive going-concern uncertainties - pervasive scope limitations - and situations in which the auditors are not independent.
Confirmation
Engagement risk
Disclaimer of opinion
Audit evidence
24. The total of the projected misstatement plus the allowance for sampling risk.
Classical variables sampling
ositive confirmation
Upper misstatement limit
Unqualified opinion
25. The process of covering a cash shortage by applying cash from one customer's accounts receivable against another customer's accounts receivable.
Dual dating
Lapping
Risk of incorrect rejection
Computer-assisted audit techniques (CAATs)
26. The policies and procedures that help ensure that management's directives are carried out.
Nonsampling risk
Audit risk
Control activities
Allowance for sampling risk
27. The amount of the planning materiality that is allocated to a financial statement account.
Attribute sampling
Engagement quality review
Significant risk
Tolerable misstatement
28. 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.
Sampling risk
Walkthrough
General controls
Statistical sampling
29. The risk that the auditor may unknowingly fail to appropriately modify the opinion on materially misstated financial statements.
Materiality
Audit risk
Working papers
Application controls
30. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Audit strategy
Assertions
Assurance Services
Analytical procedures
31. 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
Management letter
Audit sampling
Dual-purpose tests
Audit documentation (working papers)
32. The risk that the entity's financial statements will contain a material misstatements whether caused by error or fraud.
Tolerable misstatement
Tolerable deviation rate
Substantive tests of transactions
Risk of material misstatement
33. The diagnosticity of evidence; that is whether the type of evidence can be relied on to signal the true state of the assertion.
Monetary unit sampling
Control deficiency
Reliability of evidence
Control risk
34. 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.
Confidence bound
Tests of details of account balances and disclosures
Significant deficiency
Scope limitation
35. 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.
Substantive tests of transactions
Desired confidence level
Substantive tests of transactions
ateriality
36. A letter that corroborates oral representations made to the auditor by management or by other auditors and documents the continued appropriateness of such representations.
Monetary unit sampling
Attribute sampling
Substantive strategy
Representation letter
37. Tests to detect errors or fraud in individual transactions.
Independence
Public accounting firm
Audit evidence
Substantive tests of transactions
38. The susceptibility of an assertion to material misstatement - assuming no related controls
Control environment
Sampling unit
Inherent risk
Nonsampling risk
39. Substantive tests that concentrate on the details of items contained in the account balance and disclosures.
Reperformance
Tests of details of account balances and disclosures
Internal Control
Analytical procedures
40. 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
Significant account or disclosure
Entity-level controls
Risk of incorrect acceptance
Adverse opinion
41. The probability that the true but unknown measure of the characteristic of interest is within specified limits.
Allowance for sampling risk
Information asymmetry
Desired confidence level
Nonsampling risk
42. The risk that the auditor may unknowingly fail to appropriately modify his or her opinion on financial statements that are materially misstated.
Internal Control
Audit Risk
Reliance strategy
Monetary unit sampling
43. 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
Entity-level controls
Sampling risk
Other information
Nonstatistical sampling
44. 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
Attest
Audit committee
Qualified opinion
Inspections of tangible assets
45. 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)
Analytical procedures
Contingent liability
Reporting
Inspections of tangible assets
46. Test of transactions that both evaluate the effectiveness of controls and detect monetary errors.
Significant deficiency
Confirmation
Dual-purpose tests
Statistical sampling
47. Seeking information of knowledgeable persons - both financial and nonfinancial - throughout the entity or outside the entity.
Inquiry
Engagement quality review
Unqualified opinion
Reasonable assurance
48. The maximum deviation rate from a prescribed control that the auditor is willing to accept without altering the planned assessed level of control risk.
Electronic (Internet) commerce
Tolerable deviation rate
Attribute sampling
Confirmation
49. 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.
Generally accepted auditing standards
Tests of details of account balances and disclosures
Lapping
Corporate governance
50. A violation of laws or governmental regulations.
Nonsampling risk
Substantive strategy
Representation letter
Illegal act
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