For each of the following independent statements, state whether you agree or disagree with the statement and fully explain your answer.
Required
a. Each of the following changes (considered individually, and holding other
things constant) can be expected to decrease the level of detection risk
associated with the auditor's substantive tests:
b. Auditing standards require that if an auditor plans to assess control risk as high, internal controls must be of higher quality and the auditor must perform more extensive tests of such controls.
c. A company that has a high business risk would suggest that the auditor should reduce the level of audit risk to provide for greater assurance that the audited financial statements would not be materially misstated.
d. When the auditor assesses the risk of material misstatement as low, detection risk would be assessed as high.
Ans. (a). Disagree. Both decrease in materiality and reducing the level of audit risk will result in enhancing the level of detection risk associated with the auditor's substantive tests.
Ans. (b). Agree. Where the auditor identifies the control risk as high, internal controls must be checked thoroughly as this would help the auditor to get reasonable assurance.
Ans. (c). Agree. The overall objective of an independent audit should be to obtain reasonable assurance whether the financial statements reflects a true and fair view of the state of affairs of the company or not.
Ans. (d). Disagree. Where the auditor assesses the risk of material misstatement as low, detection risk would also be assessed as low.
For each of the following independent statements, state whether you agree or disagree with the statement...
For each of the following independent statements, state whether you agree or disagree with the statement and fully explain your answer. Required Each of the following changes (considered individually, and holding other things constant) can be expected to decrease the level of detection risk associated with the auditor's substantive tests: decreasing materiality reducing the level of audit risk Auditing standards require that if an auditor plans to assess control risk as high, internal controls must be of higher quality and...
For each of the following independent statements, state whether you agree or disagree with the statement and fully explain your answer. Required Each of the following changes (considered individually, and holding other things constant) can be expected to decrease the level of detection risk associated with the auditor's substantive tests: decreasing materiality reducing the level of audit risk Auditing standards require that if an auditor plans to assess control risk as high, internal controls must be of higher quality and...
auditing
Question one Answer each of the following statements true or false. If it's false explain how the correct statement should be. (10 marks) i) If planned performance materiality is reduced, the amount of evidence the auditor accumulates will decrease. ii) If acceptable audit risk is low, and inherent risk and control risk are both low, then planned detection risk should be high. ii) If the audit assurance rate or tolerable misstatement is 95%, then the level of acceptable audit...
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...
For each of the following independent statements, state whether you agree or disagree with the statement and explain your answer. Required The tolerable deviation rate varies inversely with sample size. Inspection of signatures on time cards is an example of attribute sampling. Sampling error occurs when an auditor incorrectly interprets the results of the sample. Statistical and non statistical sampling allow the auditor to quantify sampling risk. It is the auditor's responsibilities to ensure that an external expert engaged to...
For each of the following independent statements, state whether you agree or disagree with the statement and explain your answer. Required The tolerable deviation rate varies inversely with sample size. Inspection of signatures on time cards is an example of attribute sampling. Sampling error occurs when an auditor incorrectly interprets the results of the sample. Statistical and non statistical sampling allow the auditor to quantify sampling risk. It is the auditor's responsibilities to ensure that an external expert engaged to...
For each of the following independent statements, state whether you agree or disagree with the statement and explain your answer. Required a. The tolerable deviation rate varies inversely with sample size. b. Inspection of signatures on time cards is an example of attribute sampling. c. Sampling error occurs when an auditor incorrectly interprets the results of the sample. d. Statistical and non statistical sampling allow the auditor to quantify sampling risk. e. It is the...
1. Consider the following statements: I. Clearly trivial and not material are terms that can be used interchangeably. II. The higher the dollar amount of (performance) materiality the less audit evidence is required. a. I is true; II is true b. I is true; II is false c. I is false; II is true d. I is false; II is false 2. Consider the following statements: I. Per auditing standards, the successor [new]...
Question: Question 183 Processing auditor test data using the client's software application _______. -will allow the auditor to verify manual controls within the software application are functioning as designed -may corrupt the client's system, and should not be attempted -will allow the auditor to verify that the software application is functioning as designed -should be performed without the knowledge of the client's senior management Question 19 The tolerable deviation rate _______. -relates to how many immaterial misstatements the auditor finds...
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...