Homework Answers
15. The sufficiency of audit evidence refers to quality i.e., validity and quantity i.e., relevance of evidence.
So the answer is True.
16. If the amount of evidence is high then the detection risk will be minimized and vice versa.
So the acceptable level of detection risk is inversely related to amount of evidence to be gathered.
So the answer is Option B.
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principles of auditing
ch 2
QUESTION 15 The sufficiency of audit evidence refers to the validity...
auditing Question one Answer each of the following statements true or false. If it's false explain...
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 11 Audit risk for an individual account consists of business...
principles of auditing
chapter 2
QUESTION 11 Audit risk for an individual account consists of business risk, detection risk, and control risk. True False QUESTION 12 There is an inverse relationship between the effectiveness of an entity's system of internal control and the A. Reliability of financial statements. B. Fairness of management assertions in the financial statements. C. Degree of staff supervision required in the performance of an audit. D. Extent of detailed audit tests required.
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...
Ch.9 Discussion topic the following question with 2-parts: From reading and study of chapter: (1) Please...
Ch.9 Discussion topic the following question with 2-parts: From reading and study of chapter: (1) Please describe the audit risk model (RMM: risk of material misstatement model) based on your own understanding and explain the each term (factor) in the model in terms of how each factor affects to the overall audit risk (increase or decrease) and amount of audit evidence (nature, timing, and extent of evidence). (2) Also, describe its interrelationships among each of FOUR factors of the risk...
Principles of auditing chapter 2 QUESTION 5 The generally accepted standards of fieldwork relate to A....
Principles of auditing
chapter 2
QUESTION 5 The generally accepted standards of fieldwork relate to A. Criteria for the content of the auditor's report on financial statements. B. Audit planning and evidence gathering. C. The need to maintain independence in mental attitude. D. The competence, independence, and professional care of persons performing the audit. QUESTION 6 The preliminary estimate of materiality bears an inverse relationship to audit risk. True False QUESTION 7
principles of auditing chapter 2 QUESTION 13 The three generally accepted auditing standards classified as general...
principles of auditing
chapter 2
QUESTION 13 The three generally accepted auditing standards classified as general standards can be described as criteria for the A. Competence, independence, and professional care of individuals performing the audit. B. Planning and supervision of the audit engagement C. Content of the financial statements and related footnote disclosures and the consistency standard. D. Content of the auditor's report, study of internal control, and planning. QUESTION 14 The internal controls of an entity are the policies...
principles of auditing chapter 2 QUESTION 7 The internal controls of an entity are the policies...
principles of auditing
chapter 2
QUESTION 7 The internal controls of an entity are the policies and procedures, which the entity has implemented to provide reasonable assurance that the entity's objectives are being achieved. True False QUESTION 8 The three generally accepted auditing standards classified as general standards can be described as criteria for the A. Content of the auditor's report, study of internal control, and planning. B. Competence, independence, and professional care of individuals performing the audit. C. Content...
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...
Principles of auditing ch 3 An audit report should be dated as of A. The date...
Principles of auditing
ch 3
An audit report should be dated as of A. The date the report is delivered to the client. B. The last day of fieldwork. C. The balance sheet date of the latest period reported on. D. The date a letter of audit inquiry is received from the entity's attorney of record. QUESTION 6 Auditors may issue an opinion on the balance sheet only. True False QUESTION 7 An auditor is unable to determine the amounts...
1. One of the initial steps in the audit process is to obtain a _______ that...
1. One of the initial steps in the audit process is to obtain a _______ that is used as an agreement between a CPA firm and a client for the conduct of an audit and related services. a)10-Q filed with the SEC b)Assessment report c)Audit and risk report d)Engagement letter 2. An auditor must consider both acceptable audit risk and inherent risk when planning an audit. These two types of risk affect the: a)Amount of evidence that needs to be...
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 11 Audit risk for an individual account consists of business risk, detection risk, and control risk. True False QUESTION 12 There is an inverse relationship between the effectiveness of an entity's system of internal control and the A. Reliability of financial statements. B. Fairness of management assertions in the financial statements. C. Degree of staff supervision required in the performance of an audit. D. Extent of detailed audit tests required.
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...
Ch.9 Discussion topic the following question with 2-parts: From reading and study of chapter: (1) Please describe the audit risk model (RMM: risk of material misstatement model) based on your own understanding and explain the each term (factor) in the model in terms of how each factor affects to the overall audit risk (increase or decrease) and amount of audit evidence (nature, timing, and extent of evidence). (2) Also, describe its interrelationships among each of FOUR factors of the risk...
Principles of auditing
chapter 2
QUESTION 5 The generally accepted standards of fieldwork relate to A. Criteria for the content of the auditor's report on financial statements. B. Audit planning and evidence gathering. C. The need to maintain independence in mental attitude. D. The competence, independence, and professional care of persons performing the audit. QUESTION 6 The preliminary estimate of materiality bears an inverse relationship to audit risk. True False QUESTION 7
principles of auditing
chapter 2
QUESTION 13 The three generally accepted auditing standards classified as general standards can be described as criteria for the A. Competence, independence, and professional care of individuals performing the audit. B. Planning and supervision of the audit engagement C. Content of the financial statements and related footnote disclosures and the consistency standard. D. Content of the auditor's report, study of internal control, and planning. QUESTION 14 The internal controls of an entity are the policies...
principles of auditing
chapter 2
QUESTION 7 The internal controls of an entity are the policies and procedures, which the entity has implemented to provide reasonable assurance that the entity's objectives are being achieved. True False QUESTION 8 The three generally accepted auditing standards classified as general standards can be described as criteria for the A. Content of the auditor's report, study of internal control, and planning. B. Competence, independence, and professional care of individuals performing the audit. C. Content...
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
ch 3
An audit report should be dated as of A. The date the report is delivered to the client. B. The last day of fieldwork. C. The balance sheet date of the latest period reported on. D. The date a letter of audit inquiry is received from the entity's attorney of record. QUESTION 6 Auditors may issue an opinion on the balance sheet only. True False QUESTION 7 An auditor is unable to determine the amounts...
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