Inherent risk and control risk differ from detection risk in which of the following ways? Inherent...
Inherent risk and control risk differ from detection risk in which of the following ways?
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Inherent risk and control risk exist independently of the audit.
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Inherent risk and control risk exist as a result of the auditor's judgment about materiality.
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Inherent risk and control risk are calculated by the client.
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Inherent risk and control risk are controlled by the auditor.
Homework Answers
option a is correct. i.e Inherent risk and control risk exist independently of the audit.
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Inherent risk and control risk differ from detection risk in
which of the following ways?
Inherent...
6. Which of the following statements is not correct? If (a) (b) (c) individual audit risk...
6. Which of the following statements is not correct? If (a) (b) (c) individual audit risk remains the same, detection risk has an inverse relationship to inherent risk and control risk. The auditor may make separate or combined assessments of inherent risk and control risk. Detection risk cannot be changed at the auditor's discretion The greater the inherent and control risks the auditor believes exist, the less detection risk that can be accepted. (d) 7. Inherent risk and control risk...
12. Which of the following statements are true in respect of detection risk? detection If inherent...
12. Which of the following statements are true in respect of detection risk? detection If inherent and control risk are assessed to be low then the auditor will need to lower the risk 1) If inherent and control risk are assessed to be low then the auditor will need to increase the size of samples when substantive testing A. 1 only B. 2 only C. Both of them D. Neither of them 2) Which of the following statements are true...
Detection risk for a test of details includes which of the following? I. Inherent risk II....
Detection risk for a test of details includes which of the following? I. Inherent risk II. The risk that the auditor will not detect a misstatement III. Control risk A. I and II only. B. I and III only. C. II only. D. I, II, and III.
The auditor concludes that the clients inherent risk is 40% and control risk is 60%. The...
The auditor concludes that the clients inherent risk is 40% and control risk is 60%. The auditor decides to test controls in order to be able to rely on controls. The auditor plans to conduct year-end substantive audit procedures in order to achieve a detection risk of 30%. What is the probability that that auditor will discover a material misstatement during the year-end substantive audit procedures? Answer = 1.68 [(.6 X .4) X 7] Why?????
Using the audit risk model, state the effect on control risk, inherent risk, acceptable audit risk,...
Using the audit risk model, state the effect on control risk, inherent risk, acceptable audit risk, and planned evidence for each of the following independent events. In each of the events cirlce one letter for each of the three independent variables and planned evidence: I=increase, D=decrease, N= no effect, and C= cannot determine from the information provided. A. The client's management materially decreased long-term contractual debt: Control risk IDNC Acceptable audit risk IDNC Inherent risk IDNC Planned evidence IDNC B....
Which of the following terms best describes the numerical depiction of the relationship between control risk inhere...
Which of the following terms best describes the numerical depiction of the relationship between control risk inherent risk, detection muk, and waitrisk Audit risk model Risk of m atemat model Sificace model Materiality equation
Principles of auditing chapter 2 QUESTION 17 Match the term with the correct definition Classified into...
Principles of auditing
chapter 2
QUESTION 17 Match the term with the correct definition Classified into general standards, standards of fieldwork, and standards of reporting. One minus detection risk. The underlying accounting data and all related corroborating information available to an auditor. A. Audit Evidence The likelihood that misstatement could occur and not B. Attestation Risk be prevented or detected by internal controls. C. Level of Confidence The probability that an attestor may unknowingly fail to D. Control Risk modify...
Control Risk - Materiality - Confirmation - Vouching - Tracing - SHORT ANSWER 1. List the...
Control Risk - Materiality - Confirmation - Vouching - Tracing - SHORT ANSWER 1. List the responsibilities of: Management Auditor Audit Committee DI2 = 2. Write the formula for Audit Risk, breaking out each of the formula components. AR= IR X CRX DR. Audit Inherent Control Detection Risk Risk Risk Risi Risk AR IRX CR 3. Write formulas for the following ratios - state what each can be used to measure, and what a high ratio indicates: a. Current Ratio...
Which of the following would not require a departure from an unqualified opinion? Question 1 Which...
Which of the following would not require a departure from an
unqualified opinion?
Question 1 Which of the following would not require a departure from an unqualified opinion? Selected Answer: Statement of cash flows not included Answers: Statements are not in conformity with GAAP. Scope limitation. Statement of cash flows not included Related party transactions. Question 2 Which of the following is false regarding materiality and the audit opinion? Selected Answer: The level of materiality is mathematically calculated and therefore...
(TCO H) Audit risk consists of inherent risk, control risk, and detection risk. (a) Please completely define each of the above. (b) Indicate whether each of the statements below is true or false and e...
(TCO H) Audit risk consists of inherent risk, control risk, and detection risk. (a) Please completely define each of the above. (b) Indicate whether each of the statements below is true or false and explain your position. (1) The risk that material misstatement will not be prevented or detected on a timely basis by internal controls can be reduced to 0 by having effective controls in place. (2) Detection risk is a function of the efficiency of an auditing procedure....
6. Which of the following statements is not correct? If (a) (b) (c) individual audit risk remains the same, detection risk has an inverse relationship to inherent risk and control risk. The auditor may make separate or combined assessments of inherent risk and control risk. Detection risk cannot be changed at the auditor's discretion The greater the inherent and control risks the auditor believes exist, the less detection risk that can be accepted. (d) 7. Inherent risk and control risk...
12. Which of the following statements are true in respect of detection risk? detection If inherent and control risk are assessed to be low then the auditor will need to lower the risk 1) If inherent and control risk are assessed to be low then the auditor will need to increase the size of samples when substantive testing A. 1 only B. 2 only C. Both of them D. Neither of them 2) Which of the following statements are true...
Which of the following terms best describes the numerical depiction of the relationship between control risk inherent risk, detection muk, and waitrisk Audit risk model Risk of m atemat model Sificace model Materiality equation
Principles of auditing
chapter 2
QUESTION 17 Match the term with the correct definition Classified into general standards, standards of fieldwork, and standards of reporting. One minus detection risk. The underlying accounting data and all related corroborating information available to an auditor. A. Audit Evidence The likelihood that misstatement could occur and not B. Attestation Risk be prevented or detected by internal controls. C. Level of Confidence The probability that an attestor may unknowingly fail to D. Control Risk modify...
Control Risk - Materiality - Confirmation - Vouching - Tracing - SHORT ANSWER 1. List the responsibilities of: Management Auditor Audit Committee DI2 = 2. Write the formula for Audit Risk, breaking out each of the formula components. AR= IR X CRX DR. Audit Inherent Control Detection Risk Risk Risk Risi Risk AR IRX CR 3. Write formulas for the following ratios - state what each can be used to measure, and what a high ratio indicates: a. Current Ratio...
Which of the following would not require a departure from an
unqualified opinion?
Question 1 Which of the following would not require a departure from an unqualified opinion? Selected Answer: Statement of cash flows not included Answers: Statements are not in conformity with GAAP. Scope limitation. Statement of cash flows not included Related party transactions. Question 2 Which of the following is false regarding materiality and the audit opinion? Selected Answer: The level of materiality is mathematically calculated and therefore...
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