ACP AUDITING - RISK BASED APPROACH
10th Edition
ISBN: 9780357195079
Author: JOHNSTONE
Publisher: CENGAGE C
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Chapter 7, Problem 6TFQ
To determine
Introduction: Inherent risks are the risks which are posed due to factors other than internal control. In certain situations when there are complex transactions or there are transactions which require high level of judgment in estimation, there are chances of errors and omissions. Hence, there is a direct effect of competence and integrity of management in misstatement of financial statements.
To choose:Whether the statement is true or false
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Students have asked these similar questions
The risk that a client's financial statements are susceptible to material misstatements is
a. control risk
b. inherent risk
c. audit risk
d. none of the above
Which of the following does NOT describe inherent risk?
O tends to be driven by the nature of the business or account
O risk a misstatement occurs irrespective of any controls
determined by the effectiveness of internal controls
O auditor cannot influence inherent risk
Something is deemed to be 'material' if its omission, non-disclosure or misstatement is likely to affect economic decisions or other evaluations made by users entitled to rely on the financial statements.
Select one alternative:
True
False
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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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Do you think the concept of materiality is incompatible with ethical behavior? Consider in your answer how materiality judgments affect risk assessment in an audit of financial statements.arrow_forwardWhat is inadequate risk management department in the financial system?arrow_forwardThe risk of a material misstatement in the financial statements arising due to error or omission as a result of factors other than the failure of controls is called: a. Control Risk b. Inherent Risk c. Audit Risk d. Detection Riskarrow_forward
- Information is immaterial if omitting it or misstating it could influence decisions that users make on the basis of the financial information of a specific reporting entity. True Falsearrow_forwardAssertions with high inherent risk are least likely to involve a. complex calculations b. difficult accounting issues c,. routine transactions d. sigifican judgement by managementarrow_forwardWhether the act of overstating in revenue is considered and classified to be asignificant risk. Does this risk can be charged with governance?arrow_forward
- Which of the following is the best description of reliability in relation to information in financial statements? Comprehensibility to users Influence on the economic decisions Freedom from material error and bias Inclusion of degree of caution of usersarrow_forwardHow can we reduce this risk in financial reporting process? "Are redundant and out-of-date information flows identified and terminated?"arrow_forwardWhich of the following does NOT describe substantive procedures? O includes inspection, inquiry, and confirmation O also known as substantive testing or tests of details O influenced by the overall risk assessment O designed to obtain indirect evidence of information included in the financial statementsarrow_forward
- tch 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_forwardWhy is the risk that the auditor might make a mistake in expressing a modified opinion on financial statements, which are in reality, free from material misstatements and are fairly presented considered a business risk?arrow_forwardWhich of the following situations violates the concept of reliability? Relevance is the capacity of information to make difference in decision by helping users from predictions about outcome of past, present and future events, or confirm/correct prior expectations The quality of reliability assures readers that the financial information is free from bias and faithfully represents what it purports to show, including adequate disclosure of significant information Under the IASB Framework for the Preparation and presentation of financial statements, conservatism is not a concept that is recognized as a qualitative objective I and II only II and III only I and III only I, II and IIIarrow_forward
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