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CIA > Part 2 > Flashcards

Part 2 Flashcards

1
Q

The practice of inflating sales figures by forcing more products through a distribution channel than the channel can actually sell.

A

Channel stuffing

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2
Q

The simple average, computed by adding all the numbers in a series of n samples and dividing by n.

A

Mean

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3
Q

The application of auditing skills to gather evidence that may be used in a court of law for a criminal or civil matter.

A

Forensic auditing

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4
Q

The level of caution that an individual exercises when performing a due diligence audit and reporting the results.

A

Due care

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5
Q

The ratio of gross profit to sales.

A

Gross profit margin

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6
Q

A nonrandom cause of variability.

A

Assignable cause

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7
Q

A measure of how efficiently a company uses its fixed assets to generate sales; the higher the ratio, the better.

A

Fixed asset turnover ratio

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8
Q

A measure of operational efficiency as well as effective pricing and cost controls.

A

Operating profit margin

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9
Q

A control chart that tracks the variability in a percentage measure of errors (or other attributes) in successive samples.

A

P chart

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10
Q

A statistical technique used to measure the amount of change in one value in relation to a change in another value.

A

Regression analysis

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11
Q

The money remaining from sales revenues after deductions for the cost of goods sold.

A

Gross profit

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12
Q

The ratio of total earnings to number of shares outstanding; a commonly used measure of a company’s value to investors.

A

Earnings per share

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13
Q

The value that is farthest from the mean in the positive direction but still within the range that represents statistical control.

A

Upper control limit

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14
Q

A random cause of variability in a sample.

A

Common cause

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15
Q

The process of investigating a person, business, or financial transaction.

A

Due diligence

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16
Q

Those conditions that, in the judgment of the chief audit executive, could adversely affect an organization achieving objectives; may include conditions dealing with irregularities, illegal acts, errors, inefficiency, waste, ineffectiveness, conflicts of interest, and control weaknesses.

A

Significant engagement observations

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17
Q

The average distance of each value in a distribution from the mean value of the distribution (sum of the differences divided by the number of items in the distribution).

A

Mean absolute deviation (MAD)

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18
Q

A type of evidence that is inferior to primary evidence in reliability; may be a copy of a document or oral evidence of a document’s contents.

A

Secondary evidence

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19
Q

The branch of statistics concerned with collecting, analyzing, describing, and presenting data, for example, mean, median, mode, range, variance, standard deviation.

A

Descriptive statistics

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20
Q

Financial statements that express all account balances as percentages of one relevant aggregate balance.

A

Common-size financial statements

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21
Q

A type of evidence that proves an intermediate fact from which a primary fact can be logically inferred.

A

Circumstantial evidence

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22
Q

The graph of a normal distribution of random variables in a population; perfectly symmetrical, with the mean, median, and mode lying at the same central point, most values clustered near that midpoint, and a decreasing number occurring at greater distances from the midpoint.

A

Bell curve

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23
Q

A measure of the size of variability in relation to the size of the mean; calculated by dividing the standard deviation by the mean.

A

Coefficient of variance

24
Q

A method of discovery sampling in which a variable is added to the definition of the sample by weighting items by their size.

A

Dollar unit discovery sampling (DUDS)

25
Q

A control chart that tracks variability in the means of successive samples.

A

X-bar chart

26
Q

A random cause of variability in a sample.

A

Natural cause

27
Q

The capability of sifting through and analyzing large volumes of data to find certain patterns or associations.

A

Data mining

28
Q

A measure of an operation’s effectiveness in using debt and equity to generate earnings.

A

Return on capital

29
Q

A ratio that measures the relationship of short-term debt to short-term assets by subtracting liabilities from assets; a larger number indicates a greater ability to pay current debts.

A

Net working capital ratio

30
Q

A measure of how well assets are being used to produce revenue.

A

Total asset turnover

31
Q

A statistical technique used to trace the effects of more than one independent variable on one dependent variable.

A

Multiple regression analysis

32
Q

The ratio of all an organization’s debts to all of its assets; provides a general measure of ability to repay creditors.

A

Debt ratio

33
Q

A process by which internal auditors determine the adequacy, effectiveness, and timeliness of actions taken by management on reported engagement observations and recommendations, including those made by external auditors and others.

A

Follow-up

34
Q

A ratio that is similar to the current ratio but eliminates inventory, which is considered the least liquid portion of current assets and therefore the least available for reducing current debts.

A

Quick ratio

35
Q

The branch of statistics concerned with drawing inferences about a population from samples selected from the population.

A

Inferential statistics

36
Q

A number that measures the degree of dispersion from the mean of all values in a sample.

A

Variance

37
Q

A type of analysis used to review historical sequences of data; more appropriately used in reviewing data from income statements or expense statements rather than balance sheets, which present financial information for a particular point in time.

A

Horizontal analysis

38
Q

A measure of an organization’s ability to pay fixed obligations within a set period of time.

A

Fixed payment coverage ratio

39
Q

A control chart that tracks the variability of attributes (values that can be counted, such as errors) in successive samples.

A

C chart

40
Q

A type of analysis used to review historical sequences of data; more appropriately used in reviewing data from income statements or expense statements rather than balance sheets, which present financial information for a particular point in time.

A

Trend analysis

41
Q

A type of evidence that proves a fact without requiring presumptions or interference, for example, testimony of an eyewitness to a fraud.

A

Direct evidence

42
Q

A measure of a company’s effectiveness in collecting accounts receivable; a smaller number indicates greater effectiveness in managing and collecting money from customers.

A

Days’ sales outstanding

43
Q

A type of evidence that is generally documentary; original writing is required when available.

A

Best evidence

44
Q

A control chart that tracks the variability of the range of values in successive samples.

A

R chart

45
Q

A type of evidence that is generally documentary; original writing is required when available.

A

Primary evidence

46
Q

A ratio that measures an organization’s ability to cover long-term liabilities from owners’ equity.

A

Debt to equity ratio

47
Q

A measure of an operation’s effectiveness in using assets to generate profits.

A

Return on investment (ROI)

48
Q

A measure of an operation’s relative success in generating net profits (profits after subtracting cost of goods sold, operating expenses, interest, and taxes) from a given amount of shareholders’ equity.

A

Return on equity (ROE)

49
Q

The exact midpoint of a distribution, with an equal number of items below it and above it.

A

Median

50
Q

The number that occurs most frequently in a series.

A

Mode

51
Q

The value that is farthest from the mean in the negative direction but still within the range that represents statistical control.

A

Lower control limit

52
Q

Special government auditing standards published by the US Comptroller General.

A

Yellow Book

53
Q

An analytical procedure that begins with the recognition that one set of data differs from another set in an unexpected way; for example, expenses for the current period may be unexpectedly greater than expenses for the past period by a significant amount.

A

Variance analysis

54
Q

A measure of the number of times during the year that inventory is replaced; a higher number indicates greater efficiency.

A

Inventory turnover

55
Q

A measure of an organization’s ability to service all of its liabilities; the number of times a company can cover fixed obligations with earnings before interest and taxes (EBIT).

A

Times interest earned

56
Q

A type of evidence that supplements evidence already given and tends to support it.

A

Corroborative evidence

CIA (3 decks)

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