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Test your basic knowledge |
Auditing Vocab
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Subject
:
business-skills
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
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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 auditor's decision to rely on the entity's controls - test those controls - and reduce the directs test of financial statement accounts.
Audit sampling
Control environment
Audit Risk
Reliance strategy
2. The extrapolation of sample results to the population; represents the auditors 'best estimate' of the misstatement in the sampling population
Control risk
Corporate governance
Risk of inccorect rejection
Projected misstatement
3. The risk that the entity's financial statements will contain a material misstatements whether caused by error or fraud.
Generally accepted auditing standards (GAAS)
Monitoring of controlsa
Risk of material misstatement
Audit Evidence
4. The risk that the auditor may unknowingly fail to appropriately modify his or her opinion on financial statements that are materially misstated.
Audit Risk
Internal Control
Statistical sampling
Audit sampling
5. 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.
Significant deficiency
Material weakness
Substantive procedures
Dual dating
6. 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
Material Weakness
Entity-level controls
Reasonable assurance
Sampling unit
7. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Other comprehensive basis of accounting
Reasonable assurance
Illegal act
Control risk
8. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Assertions
Auditing
Control risk
Professional skepticism
9. Ten broad statements guiding the conduct of financial statement auditing.
Statistical sampling
Representation letter
Blank or zero-balance confirmations
Generally accepted auditing standards (GAAS)
10. 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
Audit committee
Statements on Auditing Standards
Monitoring of controls
Control activities
11. Specific acts performed by the auditor in gathering evidence to determine if specific assertations are being met.
Tests of controls
Relevant Assertions
Audit procedures
Audit Evidence
12. 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.
Generally accepted auditing standards (GAAS)
Subsequent event
Engagement risk
Expected misstatement
13. The individual member of the population being sampled.
Representation letter
Control risk
Sampling unit
Relevant Assertions
14. A financial statement assertion that has a reasonable possibility of containing a misstatement or misstatements that would cause financial statements to be materially misstated.
Control environment
Reperformance
Substantive strategy
Relevant Assertions
15. The possibility that the sample drawn is not representative of the population and that - as a result - the auditor reaches an incorrect conclusion about the reliability of the control - the account balance - or class of transactions based on the samp
Detection risk
Control activities
Sampling risk
Monetary unit sampling
16. A letter that corroborates oral representations made to the auditor by management or by other auditors and documents the continued appropriateness of such representations.
Internal control over financial reporting
Significant deficiency
Illegal act
Representation letter
17. Attribute-sampling techniques used to estimaed the dollar amount of misstatement for a class of transactions or an account balance.
Independence
Monetary unit sampling
Significant deficiency
General controls
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.
Engagement quality review
Ethics
Statistical sampling
Control deficiency
19. Physical examination of the tangible assets.
Observation
Monetary-unit sampling
Electronic (Internet) commerce
Inspections of tangible assets
20. The risk that the sample supports the conclusion that the control is not operating effectively when it actually is or that the recorded account balance is materially misstated when it is not materially misstated.
Independence
Risk of incorrect rejection
Nonsampling risk
Application controls
21. Computer programs that allow auditors to test computer files and databases.
Audit evidence
Computer-assisted audit techniques (CAATs)
General controls
Application controls
22. Audit procedures performed to test material misstatements in an account balance - transaction class - or disclosure component of the financial statements.
Substantive procedures
Representation letter
Reasonable assurance
Application controls
23. 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
Generally accepted auditing standards
Risk of inccorect rejection
Other information
24. Basic unit containing the elements of the population to be sampled
Assertions
Financial statement assertions
Electronic (Internet) commerce
Sampling unit
25. A violation of laws or governmental regulations.
Reliance strategy
Nonsampling risk
Illegal act
Attribute sampling
26. 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
Control environment
Significant account or disclosure
Working papers
Attest
27. 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.
Nonstatistical sampling
Monitoring of controlsa
Risk of incorrect acceptance
Tests of controls
28. The uncertainty that results from sampling; the difference between the expected mean of the population and the tolerable deviation or misstatement.
Inherent risk
Control deficiency
Integrated audit
Allowance for sampling risk
29. Expressed or implied representations by management that are reflected in the financial statement components
Legal letter
Reliance strategy
Audit Risk
Financial statement assertions
30. The concept that the manager generally has more information about the true financial position and results of operations of the entity than the absentee owner does.
Control risk
Information asymmetry
Risk of inccorect rejection
Significant account or disclosure
31. A term that implies some risk that a material misstatement could be present in the financial statements without the auditor detecting it - even when the auditor has exercised due care.
Material weakness
Reasonable assurance
Engagement risk
Reliance strategy
32. 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.
Nonsampling risk
Audit committee
Projected misstatement
Tests of details of account balances and disclosures
33. The total of the projected misstatement plus the allowance for sampling risk.
Upper misstatement limit
Tests of details of account balances and disclosures
Management letter
Tests of controls
34. Independent professional services that improve the quality of information - or its context - for decision makers. Encompasses attest services and financial statement audits.
Allowance for sampling risk
Auditing
Assurance Services
Computer-assisted audit techniques (CAATs)
35. Standards against which the quality of the auditor's performance is measured.
Material weakness
Expected misstatement
Allowance for sampling risk
Generally accepted auditing standards
36. Test to detect errors or fraud in individual transactions.
Unqualified audit report
Substantive tests of transactions
Tests of controls
Engagement letter
37. 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
Material Weakness
Application controls
Substantive strategy
Audit Risk
38. 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
Substantive tests of transactions
Representation letter
Reliability of evidence
Internal control
39. A letter that formalizes the contract between the auditor and the client and outlines the responsibilities of both parties.
Engagement letter
Risk of incorrect acceptance
Control deficiency
Negative confirmation
40. 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.
Control activities
Reliance strategy
Financial Statement Assertions
Attest
41. 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
Tests of details of account balances and disclosures
Control risk
Internal Control
Unqualified opinion
42. 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.
Significant deficiency
Auditing
Positive confirmation
Reliance strategy
43. 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
Significant deficiency
Substantive tests of transactions
Inquiry
Other information
44. The maximum deviation rate from a prescribed control that the auditor is willing to accept without altering the planned assessed level of control risk.
Reliance strategy
Tolerable deviation rate
ositive confirmation
Analytical procedures
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)
Nonsampling risk
Reporting
Sampling risk
Control deficiency
46. Tests to detect errors or fraud in individual transactions.
Misstatement
Risk of incorrect acceptance
Dual-purpose tests
Substantive tests of transactions
47. Attribute sampling techniques used to estimate the dollar amount of misstatement for a class of transactions or an account balance.
Monetary-unit sampling
Analytical procedures
Illegal acts
Tests of controls
48. A state of objectivity in fact and in appearance - including the absence of any significant conflicts of interest.
Independence
Audit committee
Generally accepted accounting principles (GAAP)
Blank or zero-balance confirmations
49. The amount of the planning materiality that is allocated to a financial statement account.
Material weakness
Tolerable misstatement
Integrated audit
Walkthrough
50. A confirmation request on which the recipient fills in the amount or furnishes the information requested.
Statistical sampling
Inspections of tangible assets
Blank or zero-balance confirmations
Reasonable assurance