Chapter 6 Homework Questions

Statement 1: As part of obtaining an understanding of internal control, an auditor is required to obtain knowledge about the operating effectiveness of internal control.   Statement 2:  The auditor obtains an understanding of internal controls to identify the types of potential misstatements that may occur.   Group of answer choices A. False, true B. True, false C. False, false D. True, true

Determine whether statement and statement 2 is true or false 3. S1-It is necessary for the audit team members to have a collective knowledge needed to carry out the engagement S2 - An important responsibility of an auditor is the establishment and maintenance of internal control on an ongoing basis a. False, False b. True, False c. False, True d. True, True 4. S1 - Generally, the more reliable internal controls are, the lesser the substantive test procedures the auditor would need to perform in auditing year-end account balances S2 - The industry in which the client operates may give rise to specific risks of material misstatements arising from the nature of the business or the degree of regulation a. False, False b. True, False c. False, True d. True, True 5. S1 -Objectives are the overall plans for the entity, while strategies are the operational approaches by which managements intends to achieve its objectives S2- Not all controls are relevant to the auditor’s risk assessment  a.…

Case 3.11 - Equifax Suppose during a financial statement or ICFR audit that the auditors identify cybersecurity risks not having direct financial statement or ICFR implications. What should the audit team do in such circumstances?

Which of the following is least likely to be a continuous activity that an auditor would be expected to perform throughout an audit engagement? OA. Understanding the entity and its environment OB. Assessing the risk of material misstatement OC. Considering client continuance OD. Inquiring as to the design of controls

The audit risk model includes the four risks listed below. Match the type of risk with the related definition.A. Detection riskB. Control riskC. Inherent riskD. Audit risk___ 1. The probability that an auditor will give an inappropriate opinion on financial statements.___ 2. The probability that audit procedures will fail to produce evidence of material misstatements.___ 3. The probability that the client's internal control policies and procedures will fail to detect material misstatements if they have entered the accounting system.___ 4. The probability that material misstatements have occurred in transactions entering the accounting system.

determine if statement 1 and 2 are true or false 1 - The overall audit strategy sets the scope, timing, and direction of the audit, and guides the development of the more detailed audit plan.  2- The auditor will only test the controls on which the auditor intends to rely.