An audit must be customized each year because inherent risk factors for a client _______. A....
An audit must be customized each year because inherent risk factors for a client _______. A. will vary from year to year B. should be invariant throughout the industry C. should be fixed over time D. should be discussed with regulatory agencies
Homework Answers
Inherent risk is the risk posed by an error or omission in a financial statement due to a factor other than a failure of internal control. The inherent risk may or may not change year on year bases but it must be monitored to ascertain whether the risk factors have changed.
The answer is:-
A. will vary from year to year
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An audit must be customized each year because inherent risk
factors for a client _______. A....
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....
A) Auditors often must request information from the client while completing various audit tasks. What are...
A) Auditors often must request information from the client while completing various audit tasks. What are some of the issues that the auditors may encounter when requesting evidence from clients and how should they deal with those issues? B) What is the difference between inherent risk and control risk? Why is it important that auditors not assume that a certain level of control risk exists when assessing inherent risk? C) What were some of the risk factors that may impact...
Auditors begin their assessments of inherent risk during audit planning. Which of the following would not...
Auditors begin their assessments of inherent risk during audit planning. Which of the following would not help in assessing inherent risk during the planning phase? A) obtaining knowledge about the client’s business and industry B) identifying related parties C) touring the client’s plant and offices D) obtaining client’s agreement on the engagement on the engagement letter
W&S Partners began the planning phase of the Cloud 9 audit. As part of the risk...
W&S Partners began the planning phase of the Cloud 9 audit.
As part of the risk assessment phase for the new audit, the audit
team needs to gain an understanding of Cloud 9’s structure and its
business environment, determine materiality, and assess inherent
risk. This will assist the team in developing an audit strategy and
designing the nature, extent, and timing of audit procedures.
Answer the following questions based on the additional information
about Cloud 9 presented in the appendix...
Audit Risk Model. Audit risks for particular accounts and disclosures can be conceptualized in the model:...
Audit Risk Model. Audit risks for particular accounts and disclosures can be conceptualized in the model: Audit risk (AR) Inherent risk (IR) x Control risk (CR) x Detection risk (DR). Use this model as a framework for considering the following situations and deciding whether the auditor's conclusion is appropriate. a. Paul, CPA, has participated in the audit of Tordik Cheese Company for five years, first as an assistant accountant and the last two years as the senior accountant. Paul has...
(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....
When would auditors increase the amount of detailed audit procedures used to test the year-end account...
When would auditors increase the amount of detailed audit procedures used to test the year-end account balances and transactions from throughout the year? a) When the inherent risk in high b) When the inherent risk is low c) When the control risk is low d) When the detection risk is low
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...
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...
AP4.1 (LO 1) Basic Risk assessment Michael has drafted an audit plan for a new client....
AP4.1 (LO 1) Basic Risk assessment Michael has drafted an audit plan for a new client. The client is Countrywide Capers, a party supplies rental business. Countrywide Capers earns 80% of its revenue from renting marquees, tables and chairs, lights, and other party equipment and 20% from sales of disposable table- ware, utensils, napkins, and tablecloths, Michael's plan shows that audit time is divided to reflect this revenue pattern (that is, 80% of the audit time is spent on the...
W&S Partners began the planning phase of the Cloud 9 audit.
As part of the risk assessment phase for the new audit, the audit
team needs to gain an understanding of Cloud 9’s structure and its
business environment, determine materiality, and assess inherent
risk. This will assist the team in developing an audit strategy and
designing the nature, extent, and timing of audit procedures.
Answer the following questions based on the additional information
about Cloud 9 presented in the appendix...
Audit Risk Model. Audit risks for particular accounts and disclosures can be conceptualized in the model: Audit risk (AR) Inherent risk (IR) x Control risk (CR) x Detection risk (DR). Use this model as a framework for considering the following situations and deciding whether the auditor's conclusion is appropriate. a. Paul, CPA, has participated in the audit of Tordik Cheese Company for five years, first as an assistant accountant and the last two years as the senior accountant. Paul has...
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...
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...
AP4.1 (LO 1) Basic Risk assessment Michael has drafted an audit plan for a new client. The client is Countrywide Capers, a party supplies rental business. Countrywide Capers earns 80% of its revenue from renting marquees, tables and chairs, lights, and other party equipment and 20% from sales of disposable table- ware, utensils, napkins, and tablecloths, Michael's plan shows that audit time is divided to reflect this revenue pattern (that is, 80% of the audit time is spent on the...
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