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Introduction:
It is about the degree of risk involved in the prudence shown the auditor while ascertaining the sufficiency and appropriateness of audit evidence, which might result into material statement if prudence is not displayed. It also wants us to explain that if there is a high risk factor decision and low risk decision is to be taken, how sufficiency and appropriateness goes in contrast and the materiality aspect is changed.
To explain:
It is about the importance of sufficiency and appropriateness factor of auditevidence, which may result into material misstatement related with that client. It is also about the contrast factor of difference in sufficiency and appropriateness, if it is the case of a high risk decision or a low risk decision.
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Chapter 6 Solutions
Bundle: Auditing: A Risk Based-Approach, Loose-leaf Version, 11th + MindTap Accounting, 1 term (6 months) Printed Access Card
- Which of the following statements is true regarding the sufficiency of evidence needed to test an account? a. Evidence sufficiency is a measure of evidence quality. b. Evidence sufficiency is affected by the quality of evidence. c. A relationship does not exist between evidence sufficiency and evidence quality. d. For a specific client, evidence sufficiency will be the same across all accounts.arrow_forwardWhich of the following statements is correct regarding detection risk and the audit risk model? OA. The two components of detection risk are test of details risk and inherent risk. B. Detection risk is equal to risk of material misstatement divided by audit risk. OC. There is an inverse relationship between the risk of material misstatement and detection risk. OD. There is a direct relationship between control risk and detection risk.arrow_forwardThe lower the materiality level, the higher the amount of required evidence from substantive procedures to compensate for increased risk. Further audit procedures include risk assessment procedures, test of controls and substantive tests. Group of answer choices False, True True, False True, True False, Falsearrow_forward
- 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 riskarrow_forwardWhy are auditors more concerned with the risk of incorrect acceptance than the risk of incorrect rejection?arrow_forwardWhich of the following presumptions is correct about the reliability of evidential matter? a. To be reliable, evidential matter should be convincing rather than persuasive. O b. Reliability of evidential matter refers to the amount of corroborative evidence obtained. O c. Effective internal control provides more assurance about the reliability of evidential matter. O d. Information obtained indirectly from outside sources is the most reliable evidential matter.arrow_forward
- Evidence that tends to make some fact in issue more or less likely than it would be without the evidence is called: A. Relevant evidence. B. Authenticated evidence. C. Direct evidence. D. Real evidence.arrow_forwardWhat is the relationship between Evidence and Detection Risk?arrow_forwardstate the effect on planned evidence (increase or decrease) of changing each of 'AN INCREASE IN ACCEPTABLE AUDIT RISK' factor, while the other factors remain unchanged.arrow_forward
- Contrast the liability issues and disclosure of errors. Does disclosure minimize the risk? Does the disclosure improve avoidable events?arrow_forwardDoes the MM theory appear to be correct according to either empirical research or observations offirms’ actual behavior? How do assumptions affectyour conclusion about whether the MM theoryappears to be correct?arrow_forwardWhat are the advantages and disadvantages of an adverse auditarrow_forward
- Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage LearningAuditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College Pub
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