ACP AUDITING - RISK BASED APPROACH
10th Edition
ISBN: 9780357195079
Author: JOHNSTONE
Publisher: CENGAGE C
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Question
Chapter 7, Problem 19MCQ
To determine
Introduction:
According to SAS No 99, there is a requirement for brainstorming sessions to assist auditors in detection of fraud in every audit. After brainstorming session, the assessment of fraud risk is much higher than the assessment given by individual auditors before the brainstorming session.
To choose:The option which does not come under the purview of Brainstorming and hence is a false statement.
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Students have asked these similar questions
Critically evaluate how the breach of ethics by auditors could contribute to expand the audit expectation gap. Your report should include/address the following concerns:
1. Introduce/analyze ethical aspect of auditors and audit expectation gap.
2. Critically examine how different threats to ethics enlarge the audit expectation gap.
3. Propose ways to minimize the threats to ethics and thus the expectation gap of audits.
4. Determine the current developments and future direction of ethical aspects of auditors, and explain how such developments contribute to safeguard the audit profession as a concluding remarks. Include a cover page, an executive summary, a table of contents and references. You may include an appendix if necessary.
Which sentence below is true about audit risk:
A.
Audit risk is the risk that a company may hire an incompetent auditor.
B.
Audit risk can be completely eliminated through appropriate sampling of transactions.
C.
Audit is what creates the demand for an audit.
D.
Audit risk is the risk that a "clean" opinion will be issued when, in reality, the financial statements are materially misstated..
Auditors have two strategies to choose from, the lower-assessed control risk strategy and the predominantly substantive strategy. Which of the following statements about the two audit strategies is incorrect?
A.
If the client’s internal controls appear to be effective, the auditor must use the lower assessed control risk strategy.
B.
When internal controls are effective in preventing errors in the financial statement, auditors can use the lower-assessed control risk strategy.
C.
Auditors can always choose to use the predominantly substantive strategy regardless of the control risk assessment.
D.
When internal controls are not effective in preventing errors in the financial statement, auditors need to use the predominantly substantive strategy.
E.
Compared to the predominantly substantive strategy, the lower-assessed control risk strategy is more cost-efficient.
Chapter 7 Solutions
ACP AUDITING - RISK BASED APPROACH
Ch. 7 - Prob. 1TFQCh. 7 - Prob. 2TFQCh. 7 - Prob. 3TFQCh. 7 - Prob. 4TFQCh. 7 - Prob. 5TFQCh. 7 - Prob. 6TFQCh. 7 - Prob. 7TFQCh. 7 - Prob. 8TFQCh. 7 - Prob. 9TFQCh. 7 - Prob. 10TFQ
Ch. 7 - Prob. 11TFQCh. 7 - Prob. 12TFQCh. 7 - Prob. 13TFQCh. 7 - In terms of the timing of the risk response, the...Ch. 7 - Prob. 15MCQCh. 7 - Prob. 16MCQCh. 7 - Prob. 17MCQCh. 7 - Prob. 18MCQCh. 7 - Prob. 19MCQCh. 7 - Prob. 20MCQCh. 7 - Prob. 21MCQCh. 7 - Prob. 22MCQCh. 7 - Prob. 23MCQCh. 7 - Prob. 24MCQCh. 7 - Prob. 25MCQCh. 7 - Prob. 26MCQCh. 7 - Prob. 27MCQCh. 7 - Prob. 28MCQCh. 7 - Prob. 29RSCQCh. 7 - Prob. 30RSCQCh. 7 - Define the following terms: (a) performance...Ch. 7 - Prob. 32RSCQCh. 7 - Prob. 34RSCQCh. 7 - Prob. 35RSCQCh. 7 - Prob. 36RSCQCh. 7 - How does inherent risk relate to internal...Ch. 7 - Prob. 38RSCQCh. 7 - Prob. 39RSCQCh. 7 - Prob. 40RSCQCh. 7 - Prob. 43RSCQCh. 7 - Prob. 45RSCQCh. 7 - Prob. 46RSCQCh. 7 - Prob. 47RSCQCh. 7 - Prob. 48RSCQCh. 7 - Prob. 49RSCQCh. 7 - Prob. 52RSCQCh. 7 - Prob. 53RSCQCh. 7 - Prob. 54RSCQCh. 7 - Prob. 55RSCQCh. 7 - Prob. 56RSCQCh. 7 - Prob. 57RSCQCh. 7 - Prob. 58FF
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Similar questions
- The auditor needs to assess management integrity as a potential indicator of inherent risk, particularly as it relates to the potential of fraud. Although the assessment of management integrity takes place on every audit engagement, it is a difficult and subjective task. It requires professional skepticism on the part of the auditor because it is human nature to trust people whom we know and interact with. For each of the following management scenarios, (1) indicate whether you believe the scenario reflects negatively on management integrity, and explain why; and (2) indicate how the assessment would affect the auditor’s planning of the audit Management Scenarios: The owner/manager of a privately held company owns three other companies. The entities could be run as one entity but they engage extensively in related-party transactions to minimize the overall tax burden for the owner/manager. The president of a publicly held company has a reputation for being stubborn with a violent…arrow_forwardThe audit risk model includes the four risks listed below. Match the type of risk with the related definition.A. Detection riskB. Control riskC. Inherent riskD. Audit risk___ 1. The probability that an auditor will give an inappropriate opinion on financial statements.___ 2. The probability that audit procedures will fail to produce evidence of material misstatements.___ 3. The probability that the client's internal control policies and procedures will fail to detect material misstatements if they have entered the accounting system.___ 4. The probability that material misstatements have occurred in transactions entering the accounting system.arrow_forwardWhich statement is false? a. If control risk is assessed as low, the auditor cannot plan on relying on the controls to increase substantive procedures for account balances. b. The auditor will not perform tests of controls; instead, the auditor must plan for substantive procedures, without relying on the client's internal controls. c. Based on obtaining an understanding through risk assessment procedures, the auditor assesses control risk ranging from high (weak controls) to low (strong controls). d. Assessing control risk as high means the auditor does not have confidence that internal controls will prevent or detect material misstatements; assessing control risk as low has the opposite implication.arrow_forward
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