There is no need to perform substantive tests procedures if the control risk is determined to be less than high level. TRUE OR FALSE? WHY?
Q: When assessing and identifying Control Risk or Risk of Material Misstatement, the auditor may answer…
A: When assessing and identifying Control Risk or Risk of Material Misstatement, the auditor may answer…
Q: Auditors have not been successful in measuring the components ofthe audit risk model. How is it…
A:
Q: Which of the following would not result in exposure to nonsampling risk?a. Measuring the…
A: Sampling: Sampling allows an individual to obtain information about the population of interest in a…
Q: What is the difference between Test of controls and Substantive procedures, give an example of each…
A: An audit assesses the integrity of a company's financial statements as well as the efficacy of its…
Q: Why are weaknesses (lack of desired control procedures) not tested for compliance? Describe how…
A: Test for Compliance Procedures are merely tests that are designed to obtain reasonable assurance…
Q: Which of the following increase control risk?
A: The answer for the multiple choice question and relevant explanation are presented hereunder : What…
Q: The assessment of control risk can be made at any of the following times except:
A: Correct option is B. After performing all the necessary substantive tests.
Q: Ordinarily, risk assessment procedures do not involve the use of audit sampling. However, the…
A: The purpose of audit risk assessment is to gain a better understanding of Organisation and its…
Q: Many auditors assert that certain audit tests can be significantlyreduced for clients with adequate…
A: Auditing: In auditing, auditors verify the correctness and fair presentation of financial…
Q: Which of the following terms best describes the risk that audit procedures will fail to detect…
A: The Correct Option is C
Q: Why are auditors more concerned with the risk of incorrect acceptance than the risk of incorrect…
A: Definition:
Q: nder PCAOB standards, when a material weakness exists, the auditors’ report on internal control is…
A: The internal auditor's report is report prepared internal as per accounting standard of PCAOB and…
Q: When the computed upper exception rate is greater than the tolerable exception rate, it is necessary…
A: When the CUER (i.e. computed upper exception rate) is greater than the TER (i.e. tolerable exception…
Q: (A) The requirement is to find the best statement concerning an auditor’s assessment of…
A: Control risk alludes to the probability that a large misrepresentation originating from a caused by…
Q: Which of the following is not one of the elements of a good system of internal control? a.Control…
A: Internal controls are the policies and procedure implemented by the organization to control day to…
Q: An auditor’s preliminary control risk assessment is at a high level. Which of the following are…
A: Solution Explanation - The preliminary assessment of control risk is the process of evaluating the…
Q: How can you explain the difference and connection of the Test of Controls and Substantive Testing
A: Both are further audit procedures
Q: What is the risk of assessing Control Risk too low?
A: Definition: Tests of controls: Tests of controls form the part of audit procedures to be…
Q: How does control risk affect the nature, timing, and extent of further audit procedures?
A:
Q: The risk of a material misstatement in the financial statements arising due to error or omission as…
A: Error or Omission is an unintentional mistake which leads to risk of material misstatement in the…
Q: performing test of controls,
A: Option a is wrong because the relationship between the assessed level of control risk and…
Q: The risk that the auditors’ own testing procedures will lead to the decision that…
A:
Q: The risk that audit evidence for a segment will fail to detect misstatements exceeding tolerable…
A: Audit evidence refers to all sorts of information, or bunch of documents or any sort of data…
Q: How can an auditor reduce a client’s inherent risk?
A: Inherent risk is the risk of material misstatement assuming there are no related controls. Inherent…
Q: What are the advantages and disadvantages of an adverse audit
A: Adverse audit refers that the opinion has been provided on the financial statements that: The…
Q: Which of the following describes the circumstances that exist when an auditor assesses control risk…
A: Solution Concept Control risk means the risk that the internal controls that are required to prevent…
Q: “Total input includes abnormal as well as normal spoilage and is, therefore, inappropriate as a…
A: Inventory shrinkage: It represents the loss of inventory. In other words, it refers to the…
Q: If detective controls signal error flags, why shouldn’t these types of controls automatically make a…
A:
Q: aterial misstatement exists when it does not exist the risk that an auditor incorrectly…
A: Risk of incorrect rejection is defined as the risk that the auditor concludes that a…
Q: CONTRAST THE CIRCUMSTANCES IN WHICH THE AUDITOR WOULD CHOOSE NOT TO TEST CONTROLS WITH THOSE IN…
A: The test of controls in auditing are the procedures used by the auditors to evaluate the internal…
Q: The concept of reasonable assurance recognizes that the cost of internal control should not exceed…
A: Internal control would seem to be a method created by an institution or university's governing…
Q: When is the timing of substantive procedures most flexible? O detection risk is assessed as low O…
A: Substantive procedure refers to a process performed by the auditor in order to detect the material…
Q: How are the sufficiency and appropriateness of evidence related to detection risk?
A: Audit Evidence: The pieces of evidence provided by the audit team to prove their opinion with…
Q: What is risk of incorrect acceptance? A. The risk that the auditor concludes that a material…
A: The risk of incorrect acceptance is referred to a situation in which the results of an audit sample…
Q: On the basis of audit evidence gathered and evaluated, an auditor decides to decrease the level of…
A: Answer: Option D. Decrease in the assessed control risk.
Q: When a substantive audit strategy is adopted, an auditor will O determine internal controls are…
A: The question is related to Auditing and is of Substantive audit Strategy. Substantive audit Strategy…
Q: An auditor assesses control risk because it: A. is relevant to the auditor's understanding of the…
A: Audit: Audit is the process of verification of the compliance of the financial statements. It…
Q: The quality of the environment in which internal control operates has a pervasive effect on many…
A: Concept Pervasive effect Pervasive effect means that the effect is spread to most of…
Q: Which of the following is NOT documented during the risk assessment phase? O understanding of…
A: solution dear student as per bartleby guideline we are required to solve the first question only .…
Q: Ordinarily, it would be appropriate to design audit procedures that would be expected to detect…
A:
Q: What is the risk of assessing Control Risk too high?
A: Control risk refers to the probability of financial statements that were considered wrongly stated…
Q: The tolerable rate of deviation set by the auditor for tests of controls depends primarily on which…
A: The auditor should determine the maximum rate of deviations from the prescribed control that he…
Q: If the sample evidence does not support the planned level of control risk, the audit team coulda.…
A: Auditing is done in order to determine that the financial statements are not materially misstated.
Q: What are the possible obstacles or hindrance of operational audi
A: The auditor is not expected to, and cannot, reduce audit risk to zero and cannot, therefore, obtain…
Q: True or false: The lower the materiality level, the higher the amount of required evidence from…
A: Auditing means the independent checking of company operation by outsider. Auditor is qualified and…
Q: In a non public audit (AICPA), auditors might chose to not test controls if Select an answer and…
A: As part of audit, it is based on the auditors judgement only to select the appropriate level of risk…
Q: Non-sampling risk, and more specifically the risk of assessing control risk too low (risk of…
A: Non-sampling risk is the risk that auditors make an incorrect conclusion for any reason that is not…
There is no need to perform substantive tests procedures if the control risk is determined to be less than high level.
TRUE OR FALSE? WHY?
Step by step
Solved in 2 steps
- When an audior increases the assessed level of control risk because certain control activities were determined to be ineffective, the auditor would most likely increase the: A. extent of tests of control B. level of detection risk C. extent of tests of detail D. Level of inherent riskNon-sampling risk, and more specifically the risk of assessing control risk too low (risk of overreliance), cannot be eliminated, but it can be controlled. TRUE OR FALSE? WHY?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.
- Which of the following terms best describes the risk that audit procedures will fail to detect material misstatements? a. Control risk. b. Inherent risk. c. Detection risk. d. Audit risk.Why is the audit team more concerned with the risk of overreliance than with the risk of underreliance?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.
- Why are weaknesses (lack of desired control procedures) not tested for compliance? Describe how weaknesses may not be detected during the review phase but discovered during the test of controls audit.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 riskOrdinarily, 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?
- True or false: The lower the materiality level, the higher the amount of required evidence from substantive procedures to compensate for increased risk.How do you figure out the balance of control and substantive testing? How does this link into control risk and detection risk?Which of the following does not increase the need for sufficient appropriate auditevidence?(1) A lower acceptable level of detection risk(2) An increase in the assessed control risk(3) A lower acceptable audit risk(4) A decrease in the assessed inherent risk