Inherent risk refers to: A. The possibility that a material misstatement that has occurred will not...
Inherent risk refers to: A. The possibility that a material misstatement that has occurred will not be detected on a timely basis by the company's control system B. The possibility that a material misstatement will occur within the reporting company's accounting information system C. The possibility that a material misstatement will occur in the financial statements D. The possibility that a material misstatement that has occurred will not be caught be the independent auditor's testing
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Inherent risk refers to: A. The possibility that a material misstatement that has occurred will not...
principles of auditing chapter 2 QUESTION 9 In a financial statement audit, inherent risk represents A....
principles of auditing
chapter 2
QUESTION 9 In a financial statement audit, inherent risk represents A. The risk that the auditor fails to modify materially misstated financial statements. B. The risk that misstatements could occur and not be prevented or detected by the system of internal control. C. The susceptibility of an account balance to misstatement that could be material. D. The risk that misstatements could occur and not be detected by the auditor's procedures. QUESTION 10 An auditor strives...
Risk of material misstatement at the assertion level A. refers to risks that are pervasive to...
Risk of material misstatement at the assertion level A. refers to risks that are pervasive to the financial statements as a whole. B. is only relevant to account balances. C. determines the nature, timing, and extent of further audit procedures. D. consists of business risk and inherent risk
(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....
(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...
Apart from the Inventory account, which other accounts and assertions are at risk of material misstatement...
Apart from the Inventory account, which other accounts and assertions are at risk of material misstatement for DD, and why? What impact does the control risk assessment have on inherent risk and detection risk? What is the auditor's preliminary assessment of control risk and why? What impact does the control risk assessment (from the previous question) have on inherent risk and detection risk? Which assertion is at risk for the inventory account? Select one: a. rights & obligations b. accuracy,...
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...
Select each of the following terms with the appropriate attributes. No reply is used more than...
Select each of the following terms with the appropriate
attributes. No reply is used more than once.
Creates a reasonable possibility a material misstatement will
not be detected.
Follow a transaction through the system.
GAAS
Inquire, inspect, observe, reperform
Inquiries, analytical procedures, observation
Likelihood auditor's procedures will not detect a material
misstatement
Merits attention, less than a material weakness
Relevant assertions
Reporting on internal control and financial statements
Risk tolerance of a financial statement user
Tests of controls and planning...
AU 240 requires auditors to document: Any specific risks of material misstatement due to fraud that...
AU 240 requires auditors to document: Any specific risks of material misstatement due to fraud that were identified The discussion among engagement personnel regarding the susceptibility of the entity's financial statements to material misstatement due to fraud The reasons supporting the auditor's conclusion if the auditor has not identified improper revenue recognition as a risk All of the above
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....
One factor and the effect on the risk of material misstatement 9-38 (oBJECTIVES 9.5,9-6, 9.7) Whitehead,...
One factor and the effect on the risk of material
misstatement
9-38 (oBJECTIVES 9.5,9-6, 9.7) Whitehead, CPA, is planning the audit of a newly obtained client, Henderson Energy Corporation, for the year ended December 31, 2016. Henderson Energy is regulated by the state utility commission, and because it is a publicly traded company the audited financial statements must be filed with the Securities and Exchange Commission (SEC). Henderson Energy is considerably more profitable than many of its competitors argely due...
principles of auditing
chapter 2
QUESTION 9 In a financial statement audit, inherent risk represents A. The risk that the auditor fails to modify materially misstated financial statements. B. The risk that misstatements could occur and not be prevented or detected by the system of internal control. C. The susceptibility of an account balance to misstatement that could be material. D. The risk that misstatements could occur and not be detected by the auditor's procedures. QUESTION 10 An auditor strives...
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...
Select each of the following terms with the appropriate
attributes. No reply is used more than once.
Creates a reasonable possibility a material misstatement will
not be detected.
Follow a transaction through the system.
GAAS
Inquire, inspect, observe, reperform
Inquiries, analytical procedures, observation
Likelihood auditor's procedures will not detect a material
misstatement
Merits attention, less than a material weakness
Relevant assertions
Reporting on internal control and financial statements
Risk tolerance of a financial statement user
Tests of controls and planning...
One factor and the effect on the risk of material
misstatement
9-38 (oBJECTIVES 9.5,9-6, 9.7) Whitehead, CPA, is planning the audit of a newly obtained client, Henderson Energy Corporation, for the year ended December 31, 2016. Henderson Energy is regulated by the state utility commission, and because it is a publicly traded company the audited financial statements must be filed with the Securities and Exchange Commission (SEC). Henderson Energy is considerably more profitable than many of its competitors argely due...
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