What is the relationship between Evidence and Detection Risk?

Q: What determines the acceptable level of Detection Risk?

A: Detection Risk:   It is a chance that an auditor will fail to identify any material misstatement…

Q: Explain the difference between unique risk and systematic risk

A: Answer

Q: Explain the types of risk?

A: Introduction: There is a risk involved in any company decision, and in personal life decisions. In…

Q: How do you figure out the balance of control and substantive testing? How does this link into…

A: Substantive testing can be defined as the process of auditing financial statements and obtaining…

Q: How is sensitivity analysis used to cope with uncertainty in decision making?

A:

Q: Why is it important to complement intuition with systematic study?

A: Organizational behaviour is the study of understanding how people behave within groups. The…

Q: What are risk assessments?

A: Risk assessment means identification of risk faced by a business organization that hampers it from…

Q: What items could increase the risk of material misstatement?

A: Risk of material misstatement (ROMM) is a risk that the financial statements when audited will…

Q: Difference between business risk and audit risk?

A: Risk is the chances that actual will differ from expected results.

Q: What is risk? What is the difference between systematic and unsystematic risk?

A: Risk: Risk can be defined as upcoming uncertainty about variation from anticipated earnings or…

Q: Why is the audit team more concerned with the risk of overreliance than with the risk of…

A: Auditing is a gathering of information and evaluation of evidence as to report on the degree of…

Q: Distinguish between inherent risk and control risk. How do internal controls affect inherent risk…

A: Audit Risk: The risk of issuing an unqualified audit report due to failure in detecting material…

Q: What are quantitative measurements versus non-quantitative measurements with respect to risk?

A: Risk is used to describe the probability or uncertainty related to a future event with a favorable…

Q: What is Non-Sampling Risk?

A: Sampling: It is a procedure used by the auditor to analyze the predetermined number of observations…

Q: What responses should an auditor take based on different levels of acceptable detection risk (DR)?…

A: There are different ways an auditor responds to fraud risks that are assessed and it depends upon…

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: Which of the following risks does the auditor least control? a. inherent risk b. control risk c.…

A: Definition: Auditing: Auditing is a process wherein the auditor investigates the financial…

Q: How is sampling risk controlled?

A: Sampling: Sampling allows an individual obtain the information about the population of interest in…

Q: What are the characteristics of Substantive Tests?

A: Audit Planning: Audit planning is the first step in the auditing process. Auditor gathers all the…

Q: What is lapping? What procedures can auditors employ to detect lapping?

A: Lapping: It refers to a type of accounting fraud that involves the hiding of misappropriated or…

Q: Define control risk and detection risk. What is the difference between control risk and detection…

A: Auditing:   In auditing, auditors verify the correctness and fair presentation of financial…

Q: What is the connection between audit sampling and audit data mining?

A: Audit sampling is the method in which audit procedure are performed on less than 100% data. In…

Q: How does Sampling Risk compare to Non-Sampling Risk?

A: Risk:   It is a probability of the financial statements being materially incorrect even though the…

Q: t is “inquiry” and “observation” procedures? Give the strengths and weaknesses of these tests?

A: This method is often used in conjunction with other, more reliable method. For example, an auditor…

Q: Audit tests and fraud?

A: For any company auditor is appointed to give an opinion on the financial statements, whether they…

Q: What is the risk of Incorrect Acceptance?

A: Risk of incorrect acceptance: The risk that the sample selected by the auditor may show that there…

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: What do "threat," "vulnerability," and "risk" really mean?

A: Threat : A declaration of purpose to cause someone pain, harm, damage, or other hostile action as…

Q: What are the risks from subversive threats?

A: Taking illegal access over a firm internal system network by doing activity of surpassing the…

Q: Distinguish between the terms sampling risk and nonsampling risk.

A: Introduction: The risk of sampling is that the conclusion based on a sample may differ from the…

Q: Discuss about systematic and unsystematic risk.

A: Risk refers to the movement or fluctuation in the value of an investment. The movement can be…

Q: what are the difference between Preventive Controls and Detective Controls?

A: Financial Reporting control activities are imposed on the accounting standard for the purpose of…

Q: Distinguish between: Systematic risk and Unsystematic risk

A: The risks faced by the company arises from both micro as well as macro levels. The risk arising out…

Q: What type of sampling are Control Tests?

A: Control test are done to ensure that the design and the implementation of controls is accurate and…

Q: What factors affect sample size?

A: Definition:   Sampling: Sampling allows an individual to obtain information about the population of…

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: How does the source of evidence affect its reliability?

A:

Q: Which of the following components of the audit risk model is most closely associated with attributes…

A: Given: The association of sampling attributes with the components of the audit risk model.

Q: Explain risk aversion

A: Introduction: Risk can be characterized in terms of the uncertainty of future consequences resulting…

Q: Has the validity of the CAPM been confirmed through empirical tests?

A: Introduction: The model of capital asset pricing is a formula that determines the relation between…

Q: Describe allowance for sampling risk (or precision)?

A:

Q: Explain what is meant by the audit expectation gap.

A: Audit expectation gap refers to the difference between public expectation about the auditor's role…

Q: What is check kiting? How might auditors detect kiting?

A: Auditing refers to the process of scrutinizing the financial statement of the business entity and…