WGU D251 - Advanced Auditing UPDATED ACTUAL Questions
and CORRECT Answers
misstatement An error, either intentional or unintentional, that exists in a transaction or financial
statement account balance.
alternative procedures 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 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 A characteristic of the population of interest to the auditor.
Attributes sampling 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 The risk that the auditor expresses an inappropriate audit opinion when the
financial statements are materially misstated.
Audit Risk Model Audit Risk = Inherent Risk X Control Risk X Detention Risk
audit risk model A conceptual depiction of the relationship between inherent risk, control risk,
detection risk, and audit risk.
Audit sampling 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 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 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 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 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 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 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 A sampling technique that involves selecting a sample that consists of contiguous
population items, such as selecting transactions by day or week.
brainstorming 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 The process of transforming all of the raw data that companies (providers) collect
from their various operations into actionable information.
busy season 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 Risks affecting the business operations and potential outcomes of an
organization's activities.
Collectibility The risk that the seller will be unable to collect the entitled contractual
consideration from the customer.
component 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.
and CORRECT Answers
misstatement An error, either intentional or unintentional, that exists in a transaction or financial
statement account balance.
alternative procedures 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 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 A characteristic of the population of interest to the auditor.
Attributes sampling 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 The risk that the auditor expresses an inappropriate audit opinion when the
financial statements are materially misstated.
Audit Risk Model Audit Risk = Inherent Risk X Control Risk X Detention Risk
audit risk model A conceptual depiction of the relationship between inherent risk, control risk,
detection risk, and audit risk.
Audit sampling 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 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 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 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 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 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 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 A sampling technique that involves selecting a sample that consists of contiguous
population items, such as selecting transactions by day or week.
brainstorming 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 The process of transforming all of the raw data that companies (providers) collect
from their various operations into actionable information.
busy season 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 Risks affecting the business operations and potential outcomes of an
organization's activities.
Collectibility The risk that the seller will be unable to collect the entitled contractual
consideration from the customer.
component 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.
