Question

26-6 Homework • Answered • Due Sep 27th, 11:59 PM Fill in the Blanks Type your answers in all of the blanks and submit How does the auditor use risk assessments when planning the audit? 1. Overall approach 2. Particularly consider 3. Design further audit procedur Answered Resubmit

Answer 1

Ques 1: How does the auditor use risk assessments when planning the audit?

Ans: 1) Identify and assess the risk of material misstatement.

2) Determine whether any of the risks identified are, in the auditor's judgement, significant risks.

3) This is in order to provide a basis for designing and performing further audit procedures.

Ques 2: An auditor might assess levels of Inherent risk or Control risk as?

Ans: 1) Inherent risk is considered to be the level of susceptibility to material misstatement that would exist if there were no controls in place.

2) Control risk is the chance that financial statements are materially misstated because of failures in a company’s system of internal controls.

The auditor should use his or her knowledge about the presence or absence of control activities obtained from the understanding of the other components of internal control over financial reporting in determining the extent to which it is necessary to devote additional attention to obtaining an understanding of control activities to assess the factors that affect the risks of material misstatement and to design further audit procedures.