controls are relevant to the auditor’s risk assessment
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Determine whether statement 1 and 2 are true or false
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. False, False
b. True, False
c. False, True
d. True, True
Step by step
Solved in 2 steps
- Refer to Exhibit 3.10 and Exhibit 3.11. Describe management’s process for evaluating internal control over financial reporting. For the control environment principles, identify evidence that management might obtain to assess the operating effectiveness of the control environment.determine whether statement 1 and 2 are true or false 2. S1- Studying the relationship of financial information with another information, whether financial or non-financial, is an example of an analytical procedure. S2-To reduce audit risk to an acceptable low level, the auditor should determine overall responses assessed risks at the assertion level a. False, False b. True, False c. False, True d. True, TrueAn auditor uses assessed control risk to(1) evaluate the effectiveness of the entity’s internal controls.(2) identify transactions and account balances where inherent risk is at the maximum.(3) indicate whether materiality thresholds for planning and evaluation purposesare sufficiently high.(4) determine the acceptable level of detection risk for financial statement assertions
- Please answer all 3 subparts. Question 1 (i) What are the 5 components of the COSO framework? A. Risk assessment, control environment, control activities, information and communication, monitoringB. Control environment, risk assessment, control activities, information and communication, monitoring.C. Control activities, monitoring, information and communication, control environment monitoringD. Control activities, control environment, risk assessment, monitoring, information and communication (ii) An opinion which is given by the auditor when the financial statements give a true and fair view except for a particular matter, which the auditor explains is called:A. An adverse opinionB. An unmodified opinionC. A qualified opinionD. A disclaimer opinion (iii) Which of the following is NOT a reason why linking reward to performance may not solve remuneration problems?A. Unsuitable measures of performance may be selected B. Many performance measures are based on the short term resultsC.…When control risk is assessed at less than high for all financial statements assertions, an auditor should document the auditor’s A B C D · Understanding of the entity’s internal control structure Yes Yes No Yes · Conclusion that control risk is less than high No Yes Yes Yes · Basis for the conclusion that control risk is less than high Yes Yes No No Group of answer choices B C A DWhen control risk is assessed at less than high for all financial statements assertions, an auditor should document the auditor’s A B C D · Understanding of the entity’s internal control structure Yes Yes No Yes · Conclusion that control risk is less than high No Yes Yes Yes · Basis for the conclusion that control risk is less than high Yes Yes No No a. D b. B c. C d. A
- An assurance service is defined as a service thata. Provides auditing services to nonfinancial information.b. Reviews unaudited financial information.c. Improves the quality of information for decision makers.d. Reduces the risk in management decision making.Which of the following is driving the need for assurance maps?a. Risk managers.Incorrect. b. Board members. c. Internal auditors. d. Compliance practitioners.5. In this stage of the operations audit process, assess conformity with the program, schedule, and objectives, and then assess the performance of the audit team. * a. Reviewing and improving the audit program b. Monitoring the audit program c. Establishing the audit program d. Implementing the audit program 6. In the management activity of " commitment and tone from the top," which of the following will not be used by an operations auditor to assess whether or not the entity meets the audit objectives? * a. Clear expectations b. Efficiency as a priority c. Established base lines d. Risk assessment 7. These performance measures highlight potential opportunities to convert given resources to the end product with less waste. * a. Economy performance measures b. Efficiency performance measures c. Equity performance measures d. Effectiveness…
- 4. Which of the following are true regarding internal auditors and the adequacy of an organization’s risk management process I. Internal auditors must understand the risk assessment process and the tools used to make the assessment II. Internal auditors should determine the level of risks acceptable to the organization III. Internal auditors need to be satisfied that the key objectives of risk management processes are being met IV. Internal auditors should evaluate management’s risk processes the same way they analyze risk when planning an engagement Group of answer choices I and III only I, II, III and IV None of the choices I, II and III only I and II onlyV3. The management letter is used: A) to list all reportable conditions with respect to internal controls. B) to make recommendations to the entity based on observations made during the audit. C)to confirm the terms of the audit engagement. D) to allow management to document, in writing, oral representations to the auditor.The auditor designs and performs a combination of tests of controls and substantive procedures to obtain reasonable assurance that the financial statements are fairly stated when control risk 1. is assessed below the maximum. 2. is assessed above the maximum. 3. cannot be assessed. 4. none of the above
