In which of the following situations would an auditor most likely choose a substantive strategy and avoid sampling transactions to test controls? O The population size is large. O The expected deviation rate is less than the tolerable deviation rate. O The tolerable deviation rate is less than the expected deviation rate. O The revised materiality level is lower than the planned level.

In which of the following situations would an auditor most likely choose a substantive strategy and avoid sampling transactions to test controls? O The population size is large. O The expected deviation rate is less than the tolerable deviation rate. O The tolerable deviation rate is less than the expected deviation rate. O The revised materiality level is lower than the planned level.

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

Chapter5: Professional Auditing Standards And The Audit Opinion Formulation Process

Section: Chapter Questions

Problem 44CYBK

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Similar questions

Which of the following increase control risk? Select which two options are correct. Select one or more: A. Lack of segregation of duties B. Reduction in sample size for substantive tests C. Optimistic forecasts presented to analysts D. Reduction in the size of the internal audit group
In an environment that is highly automated, an auditor determines that it is not possible toreduce detection risk solely by using substantive tests of transactions. Under these circumstances, the auditor most likely woulda. Perform tests of controls to support a lower level of assessed control risk.b. Increase the sample size to reduce sampling risk and detection risk.c. Adjust the materiality level and consider the effect on inherent risk.d. Apply analytical procedures and consider the effect on control risk
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
The tolerable rate of deviation set by the auditor for tests of controls depends primarily on which of the following? a. The planned risk of assessing control risk too low. b. The dollar amount of substantive misstatements. c. The anticipated cause of the errors. d. The tolerable rate used in audits of other clients in the same industry.
What are the risks if the auditor concludes controls are operating effectively based on the sample and Control Risk is set too low?
Ordinarily, risk assessment procedures do not involve the use ofaudit sampling. However, the auditor often plans and performs tests of controls concurrently with obtaining an understanding of the design of controls and determining whether they have been implemented. TRUE OR FALSE? WHY?