Question 1

The inherent risk of programming errors (and thus processing errors for the affected application systems) increases when

Accepted Answer

A)  programs are customized by an external software house. 
B)  the company uses an Internet-based applications service provider. 
C)  standard software packages are used for processing transactions. 
D)  programs are customized by an understaffed information system group. 
A)  programs are customized by an external software house. 
B)  the company uses an Internet-based applications service provider. 
C)  standard software packages are used for processing transactions. 
D)  programs are customized by an understaffed information system group.

Question 2

If the auditor assessed the detection risk as high, the extent of evidence the auditor plans to accumulate is

Accepted Answer

A)  low. 
B)  high. 
C)  medium. 
D)  uncertain: more information is needed. 
A)  low. 
B)  high. 
C)  medium. 
D)  uncertain: more information is needed.

Question 3

Use of electronic funds transfers (such as electronic data interchange and online banking) has which of the following effects on the audit risk model?

Accepted Answer

A)  decreases control risks associated with cash 
B)  increases control risks associated with cash 
C)  decreases inherent risks associated with cash 
D)  increases inherent risks associated with cash 
A)  decreases control risks associated with cash 
B)  increases control risks associated with cash 
C)  decreases inherent risks associated with cash 
D)  increases inherent risks associated with cash

Question 4

A PA firm can experience high levels of business risk if the audit firm

Accepted Answer

A)  does a poor job preparing client risk profiles. 
B)  pays its employees wages that are not in line with the market. 
C)  experiences significant litigation or has clients that do not pay their bills. 
D)  has a generous vacation policy for its staff. 
A)  does a poor job preparing client risk profiles. 
B)  pays its employees wages that are not in line with the market. 
C)  experiences significant litigation or has clients that do not pay their bills. 
D)  has a generous vacation policy for its staff.

Question 5

The risk that an auditor's procedures will lead to the conclusion that a material error does not exist in an account balance when, in fact, such error does exist is referred to as

Accepted Answer

A)  audit risk. 
B)  inherent risk. 
C)  control risk. 
D)  planned detection risk. 
A)  audit risk. 
B)  inherent risk. 
C)  control risk. 
D)  planned detection risk.

The inherent risk of programming errors (and thus processing errors for the affected application systems) increases when

If the auditor assessed the detection risk as high, the extent of evidence the auditor plans to accumulate is

Use of electronic funds transfers (such as electronic data interchange and online banking) has which of the following effects on the audit risk model?

A PA firm can experience high levels of business risk if the audit firm

The risk that an auditor's procedures will lead to the conclusion that a material error does not exist in an account balance when, in fact, such error does exist is referred to as

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Legal Liability

Professional Judgment and Ethics

Audit Responsibilities and Objectives

Client Acceptance and Planning the Audit

Internal Controls and Control Risk

Audit Evidence

Audit Strategy and Audit Program

Audit Sampling Concepts

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

Filters

Exam 7: Materiality and Risk

The inherent risk of programming errors (and thus processing errors for the affected application systems) increases when

If the auditor assessed the detection risk as high, the extent of evidence the auditor plans to accumulate is

Use of electronic funds transfers (such as electronic data interchange and online banking) has which of the following effects on the audit risk model?

A PA firm can experience high levels of business risk if the audit firm

The risk that an auditor's procedures will lead to the conclusion that a material error does not exist in an account balance when, in fact, such error does exist is referred to as

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Legal Liability

Professional Judgment and Ethics

Audit Responsibilities and Objectives

Client Acceptance and Planning the Audit

Internal Controls and Control Risk

Audit Evidence

Audit Strategy and Audit Program

Audit Sampling Concepts

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

Filters