Identify and explain the three components of audit risk
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QUESTION 2
The risk of the auditor “getting it wrong” or giving opinions that are not 100% accurate will always be present and this is referred to as audit risk. Audit risk is better understood when the components of the risks are understood. Identify and explain the three components of audit risk
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- 2 The two main types of assurance level that auditors can perform are ________ and __________ High (Audit) Moderate (Review) Negative assurance Positive assurance Question 2 options: a) B & C b) A & C c) A & B d) C & D1. Describe how the "culmination" of the audit process looks like. 2. In the final stage of a risk-based audit, how shall the auditor know that sufficient appropriate audit evidence has been obtained to support the conclusions reached for the auditor's report to be issued? 3.What are the major reasons for modifying an otherwise unmodified auditor's report?3.Residual risks are not: Group of answer choices Unaddressed risks Unmanaged risks Mitigated risks None of the choices Net risks 4. Recommendations should be included in final audit communications to: Group of answer choices Ensure that problems are resolved in the manner suggested by the auditor Provide management with options for addressing audit observations Minimize the amount of time required to correct audit observations Guarantee that audit observations are addressed, regardless of cost
- Auditing Question 3 A. Discuss the audit expectation gap. Your answer should include the following: the main causes of the expectation gap; its main components; and procedures that can be taken to reduce the expectation gap.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, True12 Audit evidence is documentary proof in support of the transactions and it is viable for the auditor to collect the relevant and sufficient audit evidence to form his opinion. What is the principle of collecting audit evidence? a. None of the options b. Lower the audit risk, more audit evidence is necessary c. Higher the audit risk, more audit evidence is required d. Higher the audit risk, less audit evidence is needed Clear my choice
- S1: When the auditor expresses a qualified or adverse opinion, communicating other key audit matters is relevant to enhancing intended users' understanding of the audit S2: When an auditor is not independent, a disclaimer must be issued stating the reason for the lack of independence S3: Scope limitations result in either a qualified opinion or adverse opinion. a. All statements are true b. All statements are false c. S1 and S2 are true d. S2 and S3 are trueDon't use chatgpt, I will 5 upvotes Objective Question: What term refers to the concept that auditors must maintain impartiality and avoid conflicts of interest when performing audits? A) Auditor objectivity B) Auditor independence C) Audit integrity D) Audit professionalismQuestion 4 inherent risk is an important part of the Audit Risk Model and has always been subject to auditor attention. Required: In your own words, explain the elements that may influence inherent risk at the financial statement level. ANSWER:
- TRUE OR FALSE: AUDITING 1. The less extensive the evidence-gathering procedures the lower the chances of formulating appropriate conclusion and the higher the level assurance that a practitioner can provide. 2. The concepts and principles on auditing and assurance introduce students to the theories underlying auditing services and provides opportunities to develop technical expertise in applying the concepts learned 3. The practitioner is required to pursue any matter which may lead to a material adjustment or modification to the subject matter of information 49. An independent auditor may participate in preparing financial statements including accompanying notes. 5. Nature of financial reporting involves preparation of financial statements based on the management’s judgment in applying an applicable financial reporting framework through coordination with the external auditorCritically evaluate how the breach of ethics by auditors could contribute to expand the audit expectation gap. Your report should include/address the following concerns: 1. Introduce/analyze ethical aspect of auditors and audit expectation gap. 2. Critically examine how different threats to ethics enlarge the audit expectation gap. 3. Propose ways to minimize the threats to ethics and thus the expectation gap of audits. 4. Determine the current developments and future direction of ethical aspects of auditors, and explain how such developments contribute to safeguard the audit profession as a concluding remarks. Include a cover page, an executive summary, a table of contents and references. You may include an appendix if necessary.1. S1: The concept of materiality would be very important to an auditor in determining transactions that should be validated. S2: The level of assurance expected to be issued affects the amount of procedures to be performed by the practitioner. Group of answer choices Both S1 and S2 are incorrect. Only S2 is correct. Both S1 and S2 are correct. Only S1 is correct. 2. S1: Analytical procedures used as substantive test focuses on detecting material misstatements. S2: The responsible party always prepare a representation that will be subjected to the validation of the practitioner. Group of answer choices Only S1 is correct. Both S1 and S2 are incorrect. Both S1 and S2 are correct. Only S2 is correct. 3. S1: After conducting an audit and release of the audit report, the primary responsibility on the fairness of the financial statements remains with the management and those charged with governance of the entity. S2: In recurring audits, the auditor may not send a new…