Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Question
Chapter 9, Problem 1RQ
To determine
Identify the parts which involve the evaluation of risk.
Expert Solution & Answer
Explanation of Solution
Identify the parts which involve the evaluation of risk as follows:
Eight parts of the planning phase of an audit are,
- 1. Accept client and perform initial planning,
- 2. Understand the client’s business and industry,
- 3. Perform preliminary analytical procedures,
- 4. Set preliminary judgment of materiality and performance materiality,
- 5. Identify significant risks due to fraud or error,
- 6. Assess inherent risk,
- 7. Understand internal control and assess control risk, and
- 8. Finalize overall audit strategy and audit plan.
The evaluation of risk is an explicit component of 5th (significant risk) 6th (inherent risk) and 7th (control risk) parts.
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Students have asked these similar questions
6.
During the planning stage, an audit planning memo will consist of these four main steps:
i) Risk Assessment
ii) Approach
iii) Materiality
iv) Sampling
v) Procedures
Question 6 options:
a)
ii, iii, iv & v
b)
i, ii, iii & v
c)
i, ii, iii & iv
d)
All of the above
20. An assurance engagement of risk management processes by the internal audit activity should start by doing all of the following, except
a. Identifying inherent risks and residual risks
b. Gaining knowledge of the risk appetite, risk capacity, and risk tolerance
c. Understanding the internal and external environment
d. Proposing revision of the entity's mission, strategy, and objectives
21. Which of the following is not one of the formal components of COSO ERM Framework?
a. Consider how objectives can be achieved by assessing the likelihood and probability of events that may affect the achievement of objectives
b. An entity's tone at the top, ethical values, and operating style will help management establish a risk management philosophy and risk appetite
c. Management must consider internal and external events that create threats and opportunities
d. Risk appetite is defined and communicated as part of the entity's mission statement
24. Review or audit of…
7.
Each of the following steps should be performed prior to accepting an audit engagement except:
Select one:a. Identifying special circumstances and unusual risks.b. Evaluating the integrity of management.c. Evaluating independence.d. Making preliminary judgments about materiality levels.
Chapter 9 Solutions
Auditing And Assurance Services
Ch. 9 - Prob. 1RQCh. 9 - Prob. 2RQCh. 9 - Provide two examples of factors that might...Ch. 9 - Prob. 4RQCh. 9 - Prob. 5RQCh. 9 - Prob. 6RQCh. 9 - Prob. 7RQCh. 9 - Prob. 8RQCh. 9 - Prob. 9RQCh. 9 - Prob. 10RQ
Ch. 9 - Prob. 11RQCh. 9 - Prob. 12RQCh. 9 - Prob. 13RQCh. 9 - Prob. 14RQCh. 9 - Prob. 15RQCh. 9 - Prob. 16RQCh. 9 - Prob. 17RQCh. 9 - Prob. 18RQCh. 9 - Prob. 19RQCh. 9 - Prob. 20RQCh. 9 - Prob. 21RQCh. 9 - Prob. 22RQCh. 9 - Prob. 23RQCh. 9 - Prob. 24RQCh. 9 - Prob. 25.1MCQCh. 9 - Prob. 25.2MCQCh. 9 - Prob. 25.3MCQCh. 9 - Prob. 26.1MCQCh. 9 - Prob. 26.2MCQCh. 9 - Prob. 26.3MCQCh. 9 - Prob. 27.1MCQCh. 9 - Prob. 27.2MCQCh. 9 - Prob. 27.3MCQCh. 9 - Prob. 28.1MCQCh. 9 - Prob. 28.2MCQCh. 9 - Prob. 28.3MCQCh. 9 - Prob. 29DQPCh. 9 - Prob. 30DQPCh. 9 - Prob. 31DQPCh. 9 - Prob. 33DQPCh. 9 - Prob. 34DQPCh. 9 - Prob. 35DQPCh. 9 - Prob. 36DQPCh. 9 - Prob. 37DQPCh. 9 - Prob. 39C
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Similar questions
- Refer to Exhibit 2.5 and answer the following questions. a. (Sections 101, 104, and 105) How does the establishment and operation of the PCAOB help to ensure quality external audits? How will audit firm inspections and investigations by the PCAOB help ensure high audit quality? b. (Sections 201-203) How do Sections 201-203 address audit ()r independence concerns? c. (Section 206) What is a cooling-off period, and how does it address auditor independence concerns? d. (Section 301) How do the audit committee requirements help ensure effective corporate governance? e. (Sections 302 and 906) How do the officer certification requirements help to address the risk of fraud in publicly traded organizations? What is the likelihood that a CFO who is committing fraudulent financial reporting would sign the certification falsely, and what are your reactions to that possibility? f. (Section 401) How does this section relate to the Enron fraud? g. (Section 404) How do the management assessment and audit or attestation of internal controls contained in this section help to address the risk of fraud in publicly traded organizations? h. (Section 407) Why is it important that at least one member of the audit committee be a financial expert? What are the financial reporting implications if the audit committee does not have any individuals serving on it who possess financial expertise? i. (Section 802) How does this section relate to the Enron fraud?arrow_forwardIn which stage of audit the audit program will be created ? a. Fieldwork b. Reporting c. Planning d. Followuparrow_forwardChapter 8 introduced the eight parts of the planning phase of anaudit. Which part is the evaluation of materiality and risk?arrow_forward
- Which of the following audit is a continuous process ? Risk Management Internal Audit Balance Sheet Preparation External Auditarrow_forwardWhich of the following is the on-going evaluation of the implementation and operation of the five various components of internal audit? a. Monitoring Activities b. Control Activities c. Control Environment d. Risk Assessmenarrow_forwardIdentify the type of audits the CAE will consider in her planning specifically for findings number 1, 2, 4 and 7arrow_forward
- Which of the following BEST describes the purpose of the audit planning phase? a) To determine the timing of the audit work. b) To communicate the results of the audit. c) To document the scope, objective(s), preliminary risk assessment and plan for the audit. d) To document the plan for substantive audit requirements.arrow_forwardWhy assess audit risks at the planning stage? Give at least 7 or more points.arrow_forwardThe internal audit risk assessment process: [SELECT ALL THAT APPLY] a) Provides the Internal Audit function with an ability to prioritize risk areas based on objective and subjective evaluation criteria. b) Should be considered the foundation of the audit function. c) Leads to the creation of the annual audit plan and audit budget. d) Should leverage management's enterprise risk management assessment process, if appropriate.arrow_forward
- The evaluation phase of the audit is referred to as ..................................? a. Entrance meeting b. Reporting c. Fieldwork d. Exit Meetingarrow_forwardThe documentation of the audit strategy is a record of the planned nature, timing and extent of riskassessment procedures and further audit procedures at the assertion level in response to theassessed risks True or False?arrow_forwardDefine the audit risk model and explain each term in the model.Also describe which two factors of the model when combined reflect the risk of materialmisstatements.arrow_forward
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