Once the auditor detects a control deficiency, which of the following steps must be taken FIRST? Perform tests of other controls related to the same assertion as the control deemed ineffective. Evaluate the severity of the deficiency on the auditor's control risk assessment for the assertion. Test the deficient control, assuming a maximim level of risk. Modify the planned substantive procedures as a result of the deficiency.

Once the auditor detects a control deficiency, which of the following steps must be taken FIRST? Perform tests of other controls related to the same assertion as the control deemed ineffective. Evaluate the severity of the deficiency on the auditor's control risk assessment for the assertion. Test the deficient control, assuming a maximim level of risk. Modify the planned substantive procedures as a result of the deficiency.

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 39CYBK

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Question 36

Once the auditor detects a control deficiency, which of the following steps must be taken FIRST?

		Perform tests of other controls related to the same assertion as the control deemed ineffective.
		Evaluate the severity of the deficiency on the auditor's control risk assessment for the assertion.
		Test the deficient control, assuming a maximim level of risk.
		Modify the planned substantive procedures as a result of the deficiency.

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Question 48 An auditor may decide not to perform tests of controls related to the control procedures within the client's information systems. Which of the following would not be a valid reason for choosing to omit tests of controls? Group of answer choices The controls duplicate operative controls existing elsewhere in the structure. There appear to be major weaknesses that would preclude the control from preventing errors and irregularities. The time and dollar costs of testing exceed the time and dollar savings in substantive testing if the tests show the controls to be effective. The controls appear adequate.
Question 46 An auditor uses the knowledge provided by the understanding of the internal control structure and the final assessed level of control risk primarily to determine the nature, timing, and extent of the Group of answer choices Attribute tests. Concurrent tests of controls. Additional tests of controls. Substantive tests
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.
13. In performing test of controls, which of the following questions IS NOT the concern that needs to be answered? a. What is the relationship between the assessed level of control risk and substantive testing? b. Who is the External Auditors? c. When was the control performed? d. Who performed the control? e. Was the control consistently applied?
12. When the auditor based on his understanding of internal control of the client concludes that the controls are ineffective or that evaluation of their effectiveness would be inefficient, then the auditor may assess control risk at the _____________ level for some or all financial statement assertions. Group of answer choices COMPLETE MAXIMUM MODERATE MEDIUM
Question 45 As the acceptable level of detection risk decreases, an auditor may change the Group of answer choices Timing of substantive tests by performing them at an interim date rather than at year end. Nature of substantive tests from a less effective to a more effective procedure. Timing of tests of controls by performing them at several dates rather than at one time. Assessed level of inherent risk to a higher amount.
Question 32 An audit team's responsibility would not include: Documentation of understanding of a client's internal controls. Communicating internal control deficiencies to management. Designing client's internal controls. Assessing the effectivenesses of a client's internal controls.
Question 30 If the auditor plans to assess control risk at less than the maximum and rely on internal controls , and the nature, timing, and extent of further audit procedures are based on the lower assessment the auditor must: Obtain evidence that the controls selected for testing are designed effectively and operating effectively during the period under audit. Assess control risk less than the maximum for all relevant assertions. Perform only substantive procedures Provide additional examples of responses to assessed fraud risks relating to fraudulent financial reporting.
Inherent risk is: a. the risk of a misstatement occurring irrespective of any internal controls put in place by management. b. the risk that the auditor's testing procedures will not detect a material misstatement. c. assessed as high when there are no internal controls tested or relied upon by the auditor. d. assessed as low when there are good internal controls in place. Choose the correct answer and explain why it is the correct answer
When an auditor decreases the planned assessed level of control risk because certain control procedures were determined to be more effective than anticipated, the auditor would most likely increase the: a. Extent of tests of details. b. Level of inherent risk. c. Extent of tests of controls. d. Level of detection risk.
(A) The requirement is to find the best statement concerning an auditor’s assessment of control risk. Answer (A) is correct because assessing control risk may be performed concurrently during an audit with obtaining an understanding of internal control. Answer (B) is incorrect because evidence about the operation of internal control from prior audits is useful in planning and executing the current year’s assessment of control risk. Answer (C) is incorrect because the basis for an auditor’s conclusions about the level of control risk must be documented when at any time control risk is assessed below maximum. Answer (D) is incorrect because a lower level of control risk requires more assurance, not less, that the controls are operating effectively.
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