CONCEPTS AND VOCAB

Question 1

Hard skills that an auditor should possess

Answer 1

include being technically competent and having the skills and knowledge necessary to perform the auditor’s work.

Question 2

soft skills that an auditor needs

Answer 2

attention to detail, excellent interpersonal skills, and honest and ethical

Question 3

Detection risk

Answer 3

The risk that occurs if an auditor does not design tests in such a way as to detect a material risk.

Question 4

control risk

Answer 4

risk caused by a failure of internal controls; it can result in a material error

Question 5

Discovery sampling

Answer 5

a form of attribute sampling, is used to discover fraud or irregularities

Question 6

Variable sampling

Answer 6

used primarily for substantive testing

Question 7

on hold

Answer 7

tests designed to obtain evidence to ensure the completeness, accuracy and validity of the data

Question 8

Substantive testing

Answer 8

Substantive testing is an auditing technique that checks for any errors or material misstatements in a company’s accounts, financial statements or supporting documents.

Question 9

Attribute/ Frequency

Answer 9

a statistical process used in audit procedures that aims to analyze the characteristics of a given population. Attribute sampling is used to determine the rate of occurrence. This practice is often used to test whether or not a company’s internal controls are being correctly followed. primarily for compliance testing during an audit.

Question 10

Discovery sampling

Answer 10

a form of attribute sampling. is used to discover fraud or irregularities. Variable sampling is used primarily for substantive testing

Question 11

Variable Sampling

Answer 11

is the process used to predict the value of a specific variable within a population. It is also known as dollar estimation. For example, a limited sample size can be used to compute the average accounts receivable balance, as well as a statistical derivation of the plus or minus range of the total receivables value that is under review.

Question 12

control risk is caused by

Answer 12

a failure of internal controls; it can result in a material error.

Question 13

Inherent risk

Answer 13

Inherent risk is the risk that can occur because of the lack of compensating controls. inherent risks can create a material risk

Question 14

Detection risk

Answer 14

risk that occurs if an auditor does not design tests in such a way as to detect a material risk Table 2-4

Question 15

Nonstatistical sampling

Answer 15

also known as judgmental sampling, uses auditor judgment to select the sample size and determine which items to select

Question 16

Statistical sampling

Answer 16

sampling is based on probability

Question 17

Stop-and-go sampling

Answer 17

used when an auditor believes that only a few errors will be found in a population

Question 18

An adverse opinion includes:

Answer 18

multiple significant deficiencies that add up to a material and pervasive weakness.

Question 19

Corrective controls

Answer 19

reduce the impact of threats and minimize the impact of problems

Question 20

Preventive controls

Answer 20

can prevent problems before they occur.

Question 21

Detective controls

Answer 21

sense and detect problems as they occur.

Question 22

Mitigating controls

Answer 22

used to discover and prevent mistakes.

Question 23

capability maturity model (CMM) How many levels of Maturity

Answer 23

specifies five levels of control for software maturity levels.

Question 24

ISO 17799 What is

Answer 24

is a comprehensive set of controls designed to gauge best practices in information security. Table 3-10

Question 25

COSO Purpose

Answer 25

was designed to help prevent and detect fraud in financial reports. Table 3-10

Question 26

COBIT Purpose

Answer 26

was designed to aid in the development of good IT processes and policies. Table 3-10