WGU D215 Auditing – Questions With Accurate
Solutions
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Terms in this set (269)
Ability of cash flow from operations to Measures ability to cover current debt maturities and
cover current debt and dividends dividends with operating cash flow.
Accounting estimate An approximation of a monetary amount when a
precise means of measurement is not available.
Accounting records Client's records of the initial accounting entry and
supporting documents.
Acid-test (quick) ratio Measures ability to meet short-term obligations with
liquid assets such as cash, short-term investments,
and receivables.
Advance shipping notice (ASN) An electronic acknowledgement of a transaction by a
supplier indicating goods shipped, prices, and other
information such as freight costs or taxes.
Adverse interest threat The threat that a CPA will not act with objectivity
because the CPA's interests are opposed to the
client's interests.
Adverse opinion Auditors state the financial statements are not fairly
presented due to a pervasively material departure
from the applicable financial reporting framework.
Advocacy threat The threat that a CPA will promote a client's interests
or position to the point that his or her objectivity or
independence is compromised.
,Allowance for sampling risk (ASR) A measure of the uncertainty associated with not
sampling the entire population.
Analytical procedures Evaluations of financial information through analysis
of plausible relationships among both financial and
nonfinancial data; analytical procedures also
encompass such investigation, as is necessary, of
identified fluctuations or relationships that are
inconsistent with other relevant information or that
differ from expected values by a significant amount.
Appropriate Refers to the quality of audit evidence gathered.
Assertions Statements or representations, explicit or implied,
made by management regarding the recognition,
measurement, presentation, and disclosure of items
included in the financial statements.
Assurance services Independent professional services that improve the
quality of information, or its context, for decision
makers.
Attestation services Services performed when an independent
practitioner, or CPA, is engaged to issue a report on
subject matter that is the responsibility of another
party.
Attribute sampling A sampling technique used to reach a conclusion
about a population in terms of a rate (frequency) of
occurrence.
Audit committee A committee of the board of directors responsible
for oversight of internal controls, financial reporting
and disclosure in the financial statements, regulatory
compliance, and the company's independent
auditors.
,Audit data analytics (ADA) The science and art of discovering and analyzing
patterns, identifying anomalies, and extracting other
useful information in data underlying or related to
the subject matter of an audit through analysis,
modeling, and visualization for planning and
performing the audit.
Audit evidence Information gathered by the auditor that is used
when forming an opinion on the fair presentation of a
client's financial statements.
Audit program A listing of details of the audit procedures to be used
when testing controls, conducting detailed
substantive audit procedures, and completing the
audit.
Audit risk The risk that an auditor expresses an inappropriate
audit opinion when the financial statements are
materially misstated.
Audit sampling The selection and evaluation of less than 100% of the
population of audit relevance such that the auditor
expects the items selected (the sample) to be
representative of the population and, thus, likely to
provide a reasonable basis for conclusions about the
population.
Audit services Services by an independent CPA that provide
financial statement users with (1) an opinion on
whether the financial statements are presented fairly,
in all material respects, in accordance with an
applicable financial reporting framework and, in
some cases, (2) an opinion on the effectiveness of
ICFR, which enhances the degree of confidence that
intended users can place in the financial statements.
Audit strategy The determination of the amount of time spent
testing the client's internal controls and conducting
detailed testing of transactions and account
balances.
, Bank confirmation Correspondence sent directly by the auditors to their
client's bank requesting information such as cash
held in the bank and details of any loans with the
bank and interest rates charged.
Basic precision (BP) The amount of estimated misstatement in the
population, even if no misstatements are detected in
the sample.
Benchmarking An audit testing strategy that can be used to allow
evidence obtained in prior audit periods to support a
conclusion about IT application controls in the
current audit period.
Bid rigging An employee assists a vendor in winning a
competitive bid for a contract; employee is
compensated, usually in the form of a cash payment.
Bill-and-hold transactions A customer is billed for goods, but goods are not
shipped; accounting principles have very narrow
criteria for when revenue can be recognized for a
bill-and-hold transaction; the transaction must be
initiated by the customer, and the customer must
have a sound economic reason for purchasing the
goods and asking the seller to continue to hold the
goods.
Board of directors A group that represents the shareholders and is
responsible for ensuring the company is being run to
benefit the shareholders.
Bond trustee A bond trustee is usually a commercial bank or a trust
company that is given fiduciary powers by a bond
issuer to enforce the terms of a bond indenture; the
trustee sees that bond interest payments are made
as scheduled and protects the interests of the
bondholders if the issuer defaults.
Solutions
Save
Terms in this set (269)
Ability of cash flow from operations to Measures ability to cover current debt maturities and
cover current debt and dividends dividends with operating cash flow.
Accounting estimate An approximation of a monetary amount when a
precise means of measurement is not available.
Accounting records Client's records of the initial accounting entry and
supporting documents.
Acid-test (quick) ratio Measures ability to meet short-term obligations with
liquid assets such as cash, short-term investments,
and receivables.
Advance shipping notice (ASN) An electronic acknowledgement of a transaction by a
supplier indicating goods shipped, prices, and other
information such as freight costs or taxes.
Adverse interest threat The threat that a CPA will not act with objectivity
because the CPA's interests are opposed to the
client's interests.
Adverse opinion Auditors state the financial statements are not fairly
presented due to a pervasively material departure
from the applicable financial reporting framework.
Advocacy threat The threat that a CPA will promote a client's interests
or position to the point that his or her objectivity or
independence is compromised.
,Allowance for sampling risk (ASR) A measure of the uncertainty associated with not
sampling the entire population.
Analytical procedures Evaluations of financial information through analysis
of plausible relationships among both financial and
nonfinancial data; analytical procedures also
encompass such investigation, as is necessary, of
identified fluctuations or relationships that are
inconsistent with other relevant information or that
differ from expected values by a significant amount.
Appropriate Refers to the quality of audit evidence gathered.
Assertions Statements or representations, explicit or implied,
made by management regarding the recognition,
measurement, presentation, and disclosure of items
included in the financial statements.
Assurance services Independent professional services that improve the
quality of information, or its context, for decision
makers.
Attestation services Services performed when an independent
practitioner, or CPA, is engaged to issue a report on
subject matter that is the responsibility of another
party.
Attribute sampling A sampling technique used to reach a conclusion
about a population in terms of a rate (frequency) of
occurrence.
Audit committee A committee of the board of directors responsible
for oversight of internal controls, financial reporting
and disclosure in the financial statements, regulatory
compliance, and the company's independent
auditors.
,Audit data analytics (ADA) The science and art of discovering and analyzing
patterns, identifying anomalies, and extracting other
useful information in data underlying or related to
the subject matter of an audit through analysis,
modeling, and visualization for planning and
performing the audit.
Audit evidence Information gathered by the auditor that is used
when forming an opinion on the fair presentation of a
client's financial statements.
Audit program A listing of details of the audit procedures to be used
when testing controls, conducting detailed
substantive audit procedures, and completing the
audit.
Audit risk The risk that an auditor expresses an inappropriate
audit opinion when the financial statements are
materially misstated.
Audit sampling The selection and evaluation of less than 100% of the
population of audit relevance such that the auditor
expects the items selected (the sample) to be
representative of the population and, thus, likely to
provide a reasonable basis for conclusions about the
population.
Audit services Services by an independent CPA that provide
financial statement users with (1) an opinion on
whether the financial statements are presented fairly,
in all material respects, in accordance with an
applicable financial reporting framework and, in
some cases, (2) an opinion on the effectiveness of
ICFR, which enhances the degree of confidence that
intended users can place in the financial statements.
Audit strategy The determination of the amount of time spent
testing the client's internal controls and conducting
detailed testing of transactions and account
balances.
, Bank confirmation Correspondence sent directly by the auditors to their
client's bank requesting information such as cash
held in the bank and details of any loans with the
bank and interest rates charged.
Basic precision (BP) The amount of estimated misstatement in the
population, even if no misstatements are detected in
the sample.
Benchmarking An audit testing strategy that can be used to allow
evidence obtained in prior audit periods to support a
conclusion about IT application controls in the
current audit period.
Bid rigging An employee assists a vendor in winning a
competitive bid for a contract; employee is
compensated, usually in the form of a cash payment.
Bill-and-hold transactions A customer is billed for goods, but goods are not
shipped; accounting principles have very narrow
criteria for when revenue can be recognized for a
bill-and-hold transaction; the transaction must be
initiated by the customer, and the customer must
have a sound economic reason for purchasing the
goods and asking the seller to continue to hold the
goods.
Board of directors A group that represents the shareholders and is
responsible for ensuring the company is being run to
benefit the shareholders.
Bond trustee A bond trustee is usually a commercial bank or a trust
company that is given fiduciary powers by a bond
issuer to enforce the terms of a bond indenture; the
trustee sees that bond interest payments are made
as scheduled and protects the interests of the
bondholders if the issuer defaults.
