Internal Control
Legal Liability
Audit Planning / Evidence
Auditor's Responsibilities / Audit Standards
Miscellaneous
100

This describes the process of requiring more than one individual to complete a task, and requires collusion in order for a fraud to occur.

What is Segregation of Duties?

100

This describe the failure of an auditor to use minimal care and represents a reckless disregard for the truth.

What is Gross Negligence?

100

In order for evidence to effectively support and corroborate management's assertions, it must have these two qualities.

What is Sufficient and Appropriate?

100

Auditors need to obtain this level of assurance as to whether financial statements are free from material misstatement.

What is Reasonable Assurance?

100

Together, these three terms comprise the "Fraud Triangle".

What is:

1. Pressure

2. Opportunity

3. Rationalization

200

There are four types of tests that can be used to assess the effectiveness of internal controls. Name two of them.

What is:

1. Inquiry

2. Inspection

3. Observation

4. Reperformance / Recalculation

200

This type of law includes laws that have been based by the government, including federal securities law and state statutes.

What is Statutory Law?

200

This term refers to the significance / importance of an item, is a matter of professional judgment, and influences the nature / amount of testing that needs to be performed.

What is Materiality?

200

This attitude includes a questioning mind and a critical assessment of audit evidence.

What is Professional Skepticism?

200

This is the group the internal audit function should report to within a company.

What is the Audit Committee / Board of Directors?

300

The COSO Framework / Cube is comprised of five different components. Name three of them.

What is:

1. Control Environment

2. Risk Assessment

3. Control Activities

4. Information & Communication

5. Monitoring Activities

300

There are four potential defenses against breach of contract law suits. Name two of them.

What is:

1. Auditor did not have a duty to perform the service

2. Auditor exercised due professional care

3. Client was contributorily negligent

4. Client's losses were not caused by the breach of contract

300

There are four types of risk included in the audit risk model. Name two of them.

What is:

1. Audit Risk

2. Inherent Risk

3. Detection Risk

4. Control Risk  

300

Section 404 of this act requires management assessment and external audit firm attestations over the effectiveness of internal controls.

What is the Sarbanes Oxley Act of 2002? (SOX)

300

This Act requires companies to file a prospectus before they can begin issuing stock to the public.

What is the Securities Act of 1933?

400

These control activities only affect certain processes, transactions, accounts, and assertions.

What are Transaction / Application Controls?

400

This type of liability allows users who experience a loss to recover full damages from multiple defendants regardless of the level of fault of the parties.

What is Joint and Several Liability?

400

This action describes the process of taking a sample of recorded transactions and obtaining original source documents supporting the recorded transaction.

What is Vouching?

400

There are four types of opinions that can be issued. Name two of them.

What is:

1. Unqualified / Unmodified

2. Qualified

3. Adverse

4. Disclaimer of Opinion

400

These procedures can be performed to assess trend / ratio analysis and may be used to decrease the amount of substantive testing required in an audit.

What are Analytical Procedures?

500

This term describes a step-by-step record by which accounting or other financial data can be traced through the entire process, back to their source.

What is an Audit Trail?

500

To win a claim against an auditor, third parties suing must generally prove these three things.

What is:

1. They suffered a loss

2. The loss was due to reliance on misleading financial statements

3. The auditor knew (or should have known) that the statements were misleading.

500

This period describes the period between the interim date and the balance sheet date.

What is the Roll Forward Period?

500

There are five primary assertions that auditors will evaluate as part of the opinion formulation process. Name two of them.

What is:

1. Existence

2. Completeness

3. Rights and Obligations

4. Valuation

5. Presentation and Disclosure

500

We discussed six red flags relevant to related party transactions. Name three of them.

What are:

1. Interest Free Loans

2. Loans to Officers / Board Members

3. Purchases at Bargain Prices

4. Premium Prices for Generic Products

5. Unusual Rights of Return

6. Unusual Repayment Terms