# "If the Inherent Risk level is: "And the Control Risk level is: What is the...
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# |
"If the Inherent Risk level is: |
"And the Control Risk level is: |
What is the Residual Risk level? |
"Inherent Risk Level Question |
Control Question |
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1 |
High |
High |
? |
"Provide an example of an account with a high inherent risk |
For this specific account and risk level, provide an example of an internal control with a high level of control risk |
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2 |
High |
Low |
? |
"Provide an example of an account with a high inherent risk |
For this specific account and risk level, provide an example of an internal control with a low level of control risk |
|
3 |
Low |
High |
? |
"Provide an example of an account with a low inherent risk |
Provide an appropriate internal control for this specific account and risk level |
|
4 |
Low |
Low |
? |
"Provide an example of an account with a low inherent risk |
Provide an appropriate internal control for this specific account and risk level |
Homework Answers
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"If the Inherent Risk level is:
"And the Control Risk level is:
What is the...
Question 13 When control risk is deemed high, the auditor should: (Select the correct answer.) a....
Question 13 When control risk is deemed high, the auditor should: (Select the correct answer.) a. Perform sufficient and appropriate substantive procedures that reduce detection risk to a low level. b. Perform sufficient and appropriate substantive procedures that reduce inherent risk to a low level. c. Perform fewer sufficient and appropriate substantive procedures in order to increase detection risk. d. Resign from the audit engagement. Question 14 An auditor determines that management integrity is high, the RMM is low, and...
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....
(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....
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...
1. Define internal control. 2. Internal control provides reasonable assurance. Explain. 3. What are the objectives...
1. Define internal control. 2. Internal control provides reasonable assurance. Explain. 3. What are the objectives of a system of internal control? 4. Enumerate, and explain briefly, the components of an internal control. 5. What is the control environment? What are the elements that comprise the control environment? 6. What is meant by risk assessment process? 7. What is an information system? 8. What are control activities? 9. Give the different types of control activities. 10. Why is it necessary...
Chapter 7:Internal Control Question1: Because of the Inherent inconsistency of automated controls, auditors will test them...
Chapter 7:Internal Control Question1: Because of the Inherent inconsistency of automated controls, auditors will test them at various times in the year to determine their operating effectiveness. True False Question2: A correct response by management to an assessment of risk could include taking no action because the risk is consistent with the risk tolerance of the organization. True False Question3: A primary objective of procedures performed to obtain an understanding of internal control is to provide an auditor with Knowledge...
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?????
(TCO F) In a financial statement audit, inherent risk is evaluated to help an auditor assess...
(TCO F) In a financial statement audit, inherent risk is evaluated to help an auditor assess which of the following? 1 The risk that the audit procedures implemented will not detect a material misstatement of a financial statement assertion 2 The risk that the internal control system will not detect a material misstatement of a financial statement assertion 3 The internal audit department's objectivity in reporting a material misstatement of a financial statement assertion it detects to the audit committee...
13 Following are three situations that involve the audit risk model as it is used for...
13 Following are three situations that involve the audit risk model as it is used for planning audit evidence requirements in the audit of inventory. 1 Acceptable audit risk Inherent risk Control risk Planned detection risk Planned evidence High Low Low Situation 2 Low High High 3 Medium Medium Medium Required. Fill in the blanks for planned detection risk and planned evidence using the terms low, medium, or high. Then, using your knowledge of the relationships among the foregoing factors,...
QUESTION 1 Considering the risk of overstatement of receivables due to premature revenue recognition that inflates...
QUESTION 1 Considering the risk of overstatement of receivables due to premature revenue recognition that inflates revenues and receivables, which assertion for the accounts receivable balance is typically relevant? A. Accuracy B. Existence C. Completeness D. Rights and obligations QUESTION 2 If an auditor has determined that inherent risk for accounts receivable is high and wishes to verify the balance as accurate, the best corroborating evidence would be ________. A. a phone call to the client B. a negative confirmation...
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...
13 Following are three situations that involve the audit risk model as it is used for planning audit evidence requirements in the audit of inventory. 1 Acceptable audit risk Inherent risk Control risk Planned detection risk Planned evidence High Low Low Situation 2 Low High High 3 Medium Medium Medium Required. Fill in the blanks for planned detection risk and planned evidence using the terms low, medium, or high. Then, using your knowledge of the relationships among the foregoing factors,...
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