For a particular account balance assertion, the auditor is most likely to be able to avoidsubstantive test of details with which of these sets of risk assessments?Results of analytical proceduresUnexpectedExpectedExpectedUnexpectedInherentMaximumMaximumA.B.C.LowD. Lowa. A.b. B.c. C.d. D.ControlMaximumMaximumLowLow

Auditors utilize tests of details to gather proof that the balances, disclosures, and underlying…

Answered: For a particular account balance…

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter6: Audit Evidence

Section: Chapter Questions

Problem 11CYBK

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Similar questions

Which of the following is appropriate about risk assessment? A. The assessed level of inherent and control risk can be sufficiently low, thus resulting to eliminating the need for substantive tests. B. Audit risk may be more effectively determined by assessing inherent and control risk separately. C. Detection risk is eliminated if an auditor were to examine 100 percent off the account balance or class of transactions. D. There is an iverse relationship between detection risk and the combined level of inherent and control risk
Which of the following risk types increase when an auditor performs substantive analytical audit procedures for financial statement accounts at an interim date?a. Inherent.b. Control.c. Detection.d. Sampling.
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 D
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 a. D b. B c. C d. A
The maximum amount of error in a population that the auditor is willing to accept is referred to as the acceptable risk expected error tolerable error tolerable materiality
Describe the methodology fordesigning tests of details ofbalances using the audit riskmodel.
An 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
During financial statement audit, auditors seek to restrict which type of risk? Control risk, Detection risk, Inherent risk, or Account risk
Some audit procedures may be performed before the end of the reporting period. The more the auditor relies on the operating effectiveness of controls in the assessment of risk, the greater is the extent of the auditor’s tests of controls. Group of answer choices True, True True, False False, True False, False
The risk that the auditors’ own testing procedures will lead to the decision that materialmisstatements do not exist in the financial statements when in fact such misstatements doexist isa. Audit risk.b. Inherent risk.c. Control risk.d. Detection risk.
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
Once the auditor detects a control deficiency, which of the following steps must he or shetake first?a. Perform tests of other controls related to the same assertion as the control deemedineffective.b. Evaluate the severity of the deficiency on the auditor’s control risk assessment for thatassertion.c. Modify the planned substantive procedures as a result of the deficiency.d. Test the deficient control, assuming a maximum level of risk.

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