WGU D251 - Advanced Auditing Exam
Questions With Correct Answers
misstatement |- |CORRECT |ANSWER✔✔-An |error, |either |intentional |or |unintentional, |that |exists
|in |a |transaction |or |financial |statement |account |balance.
alternative |procedures |- |CORRECT |ANSWER✔✔-Procedures |used |to |obtain |evidence |about |the
|existence |and |valuation |of |accounts |receivable |when |a |positive |confirmation |is |not |returned, |
including |examining |cash |collected |after |the |confirmation |date |and |vouching |unpaid |invoices |
to |customers' |orders, |sales |orders, |shipping |documents, |and |sales |invoices.
Altman |Z-scores |- |CORRECT |ANSWER✔✔-A |series |of |ratios |that |have |predictive |power |in |
indicating |the |likelihood |of |bankruptcy. |This |score |is |named |for |the |person |who |first |
introduced |the |concept |and |associated |measurement.
attribute |- |CORRECT |ANSWER✔✔-A |characteristic |of |the |population |of |interest |to |the |auditor.
Attributes |sampling |- |CORRECT |ANSWER✔✔-A |statistical |sampling |method |used |to |estimate |
the |rate |of |control |procedure |failures |based |on |selecting |one |sample |and |performing |the |
appropriate |audit |procedure.
Audit |Risk |- |CORRECT |ANSWER✔✔-The |risk |that |the |auditor |expresses |an |inappropriate |audit |
opinion |when |the |financial |statements |are |materially |misstated.
Audit |Risk |Model |- |CORRECT |ANSWER✔✔-Audit |Risk |= |Inherent |Risk |X |Control |Risk |X |
Detention |Risk
audit |risk |model |- |CORRECT |ANSWER✔✔-A |conceptual |depiction |of |the |relationship |between |
inherent |risk, |control |risk, |detection |risk, |and |audit |risk.
,Audit |sampling |- |CORRECT |ANSWER✔✔-The |application |of |an |audit |procedure |to |less |than |
100% |of |the |items |within |an |account |balance |or |class |of |transactions |for |the |purpose |of |
evaluating |some |characteristic |of |the |balance |or |class.
audit |scope |- |CORRECT |ANSWER✔✔-The |range |of |accounts |and |transactions |that |the |auditor |
evaluates, |along |with |the |amount |of |evidence |that |they |gather, |assessments |of |which |
accounts |and |transactions |are |material, |as |well |as |the |critical |areas |where |the |auditor |
employed |significant |assumptions |and |made |associated |professional |judgments.
auditor |business |risk |- |CORRECT |ANSWER✔✔-This |risk |reflects |the |potential |for |loss |to |the |
auditor |that |the |client |poses, |including |being |a |publicly |traded |client, |not |being |a |profitable |
engagement, |damaging |the |auditor's |reputation, |and/or |potential |litigation |relating |to |the |
engagement.
auditor-detected |misstatements |- |CORRECT |ANSWER✔✔-Such |a |misstatement |occurs |when, |
during |the |audit, |the |auditor |comes |to |find |that |there |exists |an |error |in |the |recording |of |a |
particular |transaction, |regardless |of |whether |it |was |intentional |or |unintentional.
automated |purchasing |system |- |CORRECT |ANSWER✔✔-A |networked |software |system |that |
links |a |company's |website |to |other |vendors |whose |offerings |and |prices |have |been |
preapproved |by |appropriate |management.
Basic |precision |- |CORRECT |ANSWER✔✔-The |amount |of |uncertainty |associated |with |testing |
only |a |part |of |the |population |(sampling |risk). |Basic |precision |is |calculated |as |the |sampling |
interval |multiplied |by |a |confidence |factor.
big |data |- |CORRECT |ANSWER✔✔-High |volume, |high |velocity, |and/or |high |variety |information |
assets |that |require |new |forms |of |processing |to |enable |enhanced |decision |making, |insight |
discovery, |and |process |optimization.
,Block |sampling |- |CORRECT |ANSWER✔✔-A |sampling |technique |that |involves |selecting |a |sample
|that |consists |of |contiguous |population |items, |such |as |selecting |transactions |by |day |or |week.
brainstorming |- |CORRECT |ANSWER✔✔-A |group |discussion |designed |to |encourage |auditors |to |
creatively |assess |client |risks, |particularly |those |relevant |to |the |possible |existence |of |fraud |in |
the |organization.
business |intelligence |- |CORRECT |ANSWER✔✔-The |process |of |transforming |all |of |the |raw |data |
that |companies |(providers) |collect |from |their |various |operations |into |actionable |information.
busy |season |- |CORRECT |ANSWER✔✔-An |error, |either |intentional |or |unintentional, |that |exists |
An |intensive |time |of |the |year |during |which |the |auditor |faces |the |greatest |deadline |pressure |
and |work |volume |based |upon |the |need |to |provide |assurance |over |the |client's |financial |
reports.
Client |business |risks |- |CORRECT |ANSWER✔✔-Risks |affecting |the |business |operations |and |
potential |outcomes |of |an |organization's |activities.
Collectibility |- |CORRECT |ANSWER✔✔-The |risk |that |the |seller |will |be |unable |to |collect |the |
entitled |contractual |consideration |from |the |customer.
component |- |CORRECT |ANSWER✔✔-An |entity |or |business |activity |for |which |group |or |
component |management |prepares |financial |information |that |is |required |by |the |applicable |
financial |reporting |framework |to |be |included |in |the |group |financial |statements.
component |auditor |- |CORRECT |ANSWER✔✔-An |auditor |who |performs |work |on |the |financial |
information |of |a |component |that |will |be |used |as |audit |evidence |for |the |group |audit. |A |
component |auditor |may |be |part |of |the |group |engagement |partner's |firm, |a |network |firm |of |
the |group |engagement |partner's |firm, |or |another |firm.
, concurring |partner |review |- |CORRECT |ANSWER✔✔-A |review |at |the |end |of |each |audit |
conducted |by |an |experienced |auditor, |usually |a |partner, |who |was |not |a |part |of |the |audit |
team, |but |who |has |appropriate |competence, |independence, |integrity, |and |objectivity. |The |
purpose |of |this |review |is |to |help |make |sure |that |the |audit |and |audit |documentation |are |
complete |and |support |the |audit |opinion |on |the |financial |statements |and, |for |public |
companies, |on |the |client's |internal |controls.
Control |Risk |- |CORRECT |ANSWER✔✔-The |risk |that |a |misstatement |that |could |occur |in |an |
assertion |about |a |class |of |transaction, |account |balance, |or |disclosure |and |that |could |be |
material, |either |individually |or |when |aggregated |with |other |misstatements, |will |not |be |
prevented, |or |detected |and |corrected, |on |a |timely |basis |by |the |entity's |internal |control.
corruption |perception |index |- |CORRECT |ANSWER✔✔-A |ranking |put |forth |by |Transparency |
International |that |ranks |countries |according |to |the |extent |to |which |people |believe |corruption |
exists; |the |ranking |includes |about |200 |countries |and |ranks |them |on |a |scale |from |0 |to |10 |(0 |5 |
high |corruption; |10 |5 |low |corruption).
critical |audit |matter |- |CORRECT |ANSWER✔✔-Any |matter |that |was |communicated |or |required |
to |be |communicated |to |the |audit |committee, |relating |to |accounts |or |disclosures |material |to |
the |financial |statements, |and |involving |especially |challenging, |subjective, |or |complex |auditor |
judgment.
Cycle |counts |- |CORRECT |ANSWER✔✔-Periodic |testing |of |the |accuracy |of |the |perpetual |
inventory |record |by |counting |all |inventories |on |a |cyclical |basis.
Data |analytics |tools |- |CORRECT |ANSWER✔✔-Qualitative |and |quantitative |techniques |and |
processes |that |auditors |use |to |enhance |their |productivity |and |effectiveness; |auditors |extract, |
categorize, |identify |and |analyze |patterns |or |trends |in |the |data; |data |analytics |tools |vary |
according |to |organizational |requirements.
Questions With Correct Answers
misstatement |- |CORRECT |ANSWER✔✔-An |error, |either |intentional |or |unintentional, |that |exists
|in |a |transaction |or |financial |statement |account |balance.
alternative |procedures |- |CORRECT |ANSWER✔✔-Procedures |used |to |obtain |evidence |about |the
|existence |and |valuation |of |accounts |receivable |when |a |positive |confirmation |is |not |returned, |
including |examining |cash |collected |after |the |confirmation |date |and |vouching |unpaid |invoices |
to |customers' |orders, |sales |orders, |shipping |documents, |and |sales |invoices.
Altman |Z-scores |- |CORRECT |ANSWER✔✔-A |series |of |ratios |that |have |predictive |power |in |
indicating |the |likelihood |of |bankruptcy. |This |score |is |named |for |the |person |who |first |
introduced |the |concept |and |associated |measurement.
attribute |- |CORRECT |ANSWER✔✔-A |characteristic |of |the |population |of |interest |to |the |auditor.
Attributes |sampling |- |CORRECT |ANSWER✔✔-A |statistical |sampling |method |used |to |estimate |
the |rate |of |control |procedure |failures |based |on |selecting |one |sample |and |performing |the |
appropriate |audit |procedure.
Audit |Risk |- |CORRECT |ANSWER✔✔-The |risk |that |the |auditor |expresses |an |inappropriate |audit |
opinion |when |the |financial |statements |are |materially |misstated.
Audit |Risk |Model |- |CORRECT |ANSWER✔✔-Audit |Risk |= |Inherent |Risk |X |Control |Risk |X |
Detention |Risk
audit |risk |model |- |CORRECT |ANSWER✔✔-A |conceptual |depiction |of |the |relationship |between |
inherent |risk, |control |risk, |detection |risk, |and |audit |risk.
,Audit |sampling |- |CORRECT |ANSWER✔✔-The |application |of |an |audit |procedure |to |less |than |
100% |of |the |items |within |an |account |balance |or |class |of |transactions |for |the |purpose |of |
evaluating |some |characteristic |of |the |balance |or |class.
audit |scope |- |CORRECT |ANSWER✔✔-The |range |of |accounts |and |transactions |that |the |auditor |
evaluates, |along |with |the |amount |of |evidence |that |they |gather, |assessments |of |which |
accounts |and |transactions |are |material, |as |well |as |the |critical |areas |where |the |auditor |
employed |significant |assumptions |and |made |associated |professional |judgments.
auditor |business |risk |- |CORRECT |ANSWER✔✔-This |risk |reflects |the |potential |for |loss |to |the |
auditor |that |the |client |poses, |including |being |a |publicly |traded |client, |not |being |a |profitable |
engagement, |damaging |the |auditor's |reputation, |and/or |potential |litigation |relating |to |the |
engagement.
auditor-detected |misstatements |- |CORRECT |ANSWER✔✔-Such |a |misstatement |occurs |when, |
during |the |audit, |the |auditor |comes |to |find |that |there |exists |an |error |in |the |recording |of |a |
particular |transaction, |regardless |of |whether |it |was |intentional |or |unintentional.
automated |purchasing |system |- |CORRECT |ANSWER✔✔-A |networked |software |system |that |
links |a |company's |website |to |other |vendors |whose |offerings |and |prices |have |been |
preapproved |by |appropriate |management.
Basic |precision |- |CORRECT |ANSWER✔✔-The |amount |of |uncertainty |associated |with |testing |
only |a |part |of |the |population |(sampling |risk). |Basic |precision |is |calculated |as |the |sampling |
interval |multiplied |by |a |confidence |factor.
big |data |- |CORRECT |ANSWER✔✔-High |volume, |high |velocity, |and/or |high |variety |information |
assets |that |require |new |forms |of |processing |to |enable |enhanced |decision |making, |insight |
discovery, |and |process |optimization.
,Block |sampling |- |CORRECT |ANSWER✔✔-A |sampling |technique |that |involves |selecting |a |sample
|that |consists |of |contiguous |population |items, |such |as |selecting |transactions |by |day |or |week.
brainstorming |- |CORRECT |ANSWER✔✔-A |group |discussion |designed |to |encourage |auditors |to |
creatively |assess |client |risks, |particularly |those |relevant |to |the |possible |existence |of |fraud |in |
the |organization.
business |intelligence |- |CORRECT |ANSWER✔✔-The |process |of |transforming |all |of |the |raw |data |
that |companies |(providers) |collect |from |their |various |operations |into |actionable |information.
busy |season |- |CORRECT |ANSWER✔✔-An |error, |either |intentional |or |unintentional, |that |exists |
An |intensive |time |of |the |year |during |which |the |auditor |faces |the |greatest |deadline |pressure |
and |work |volume |based |upon |the |need |to |provide |assurance |over |the |client's |financial |
reports.
Client |business |risks |- |CORRECT |ANSWER✔✔-Risks |affecting |the |business |operations |and |
potential |outcomes |of |an |organization's |activities.
Collectibility |- |CORRECT |ANSWER✔✔-The |risk |that |the |seller |will |be |unable |to |collect |the |
entitled |contractual |consideration |from |the |customer.
component |- |CORRECT |ANSWER✔✔-An |entity |or |business |activity |for |which |group |or |
component |management |prepares |financial |information |that |is |required |by |the |applicable |
financial |reporting |framework |to |be |included |in |the |group |financial |statements.
component |auditor |- |CORRECT |ANSWER✔✔-An |auditor |who |performs |work |on |the |financial |
information |of |a |component |that |will |be |used |as |audit |evidence |for |the |group |audit. |A |
component |auditor |may |be |part |of |the |group |engagement |partner's |firm, |a |network |firm |of |
the |group |engagement |partner's |firm, |or |another |firm.
, concurring |partner |review |- |CORRECT |ANSWER✔✔-A |review |at |the |end |of |each |audit |
conducted |by |an |experienced |auditor, |usually |a |partner, |who |was |not |a |part |of |the |audit |
team, |but |who |has |appropriate |competence, |independence, |integrity, |and |objectivity. |The |
purpose |of |this |review |is |to |help |make |sure |that |the |audit |and |audit |documentation |are |
complete |and |support |the |audit |opinion |on |the |financial |statements |and, |for |public |
companies, |on |the |client's |internal |controls.
Control |Risk |- |CORRECT |ANSWER✔✔-The |risk |that |a |misstatement |that |could |occur |in |an |
assertion |about |a |class |of |transaction, |account |balance, |or |disclosure |and |that |could |be |
material, |either |individually |or |when |aggregated |with |other |misstatements, |will |not |be |
prevented, |or |detected |and |corrected, |on |a |timely |basis |by |the |entity's |internal |control.
corruption |perception |index |- |CORRECT |ANSWER✔✔-A |ranking |put |forth |by |Transparency |
International |that |ranks |countries |according |to |the |extent |to |which |people |believe |corruption |
exists; |the |ranking |includes |about |200 |countries |and |ranks |them |on |a |scale |from |0 |to |10 |(0 |5 |
high |corruption; |10 |5 |low |corruption).
critical |audit |matter |- |CORRECT |ANSWER✔✔-Any |matter |that |was |communicated |or |required |
to |be |communicated |to |the |audit |committee, |relating |to |accounts |or |disclosures |material |to |
the |financial |statements, |and |involving |especially |challenging, |subjective, |or |complex |auditor |
judgment.
Cycle |counts |- |CORRECT |ANSWER✔✔-Periodic |testing |of |the |accuracy |of |the |perpetual |
inventory |record |by |counting |all |inventories |on |a |cyclical |basis.
Data |analytics |tools |- |CORRECT |ANSWER✔✔-Qualitative |and |quantitative |techniques |and |
processes |that |auditors |use |to |enhance |their |productivity |and |effectiveness; |auditors |extract, |
categorize, |identify |and |analyze |patterns |or |trends |in |the |data; |data |analytics |tools |vary |
according |to |organizational |requirements.
