Exam 4: Management Fraud and Audit Risk

If control risk increases,and all other risks in the audit risk model stay constant except the one referred to below,which of the following statements is correct?

What are the independent auditor's responsibilities to detect and report errors and frauds?

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

When determining the inherent risk related to an account balance,an auditor theoretically does not explicitly consider the

Post,CPA,accepted an engagement to audit the financial statements of General Co.,a new client.General is a publicly held retailing entity that recently replaced its operating management.In the course of applying audit procedures,Post discovered that General's financial statements may be materially misstated due to the existence of fraud. Required: Describe Post's responsibilities on the circumstances described above. Describe Post's responsibilities for reporting on General's financial statements and other communications if Post is precluded from applying necessary procedures in searching for frauds. Describe Post's responsibilities for reporting on General's financial statements and other communications if Post concludes that General's financial statements are materially affected by frauds.(AICPA adapted)

Which of the following statements best describes auditors' responsibility to detect errors and frauds?

The risk of material misstatement differs from detection risk in that it

Which of the following would not likely be found in the minutes of the board of directors?

Assume that application of analytical procedures revealed significant unexplained differences between recorded amounts and the expectations (estimates)developed by the auditor.If management is unable to provide an acceptable explanation,the auditor should

In auditing related party transactions,an auditor ordinarily places primary emphasis on

If tests of controls induce the auditor to change the assessed level of control risk for Property Plant & Equipment from 50% to 100%,and audit risk (6%)and inherent risk remain constant,the acceptable level of detection risk

The acceptable level of detection risk is inversely related to the

Experience has shown that the many large fraudulent transactions can be found in

Can an auditor place complete reliance on internal control to the exclusion of other audit procedures? Explain your answer using the audit risk model.

Analytical procedures are most appropriate when testing which of the following types of transactions?

When an auditor increases the planned assessed level of control risk because certain control activities were determined to be ineffective,the auditor would most likely increase the

According to auditing standards,external auditors' responsibilities for indirect noncompliance do not include

Which of the following analytical procedures most likely would be used during the planning stage of an audit?

The type of financial analysis that expresses balance sheet accounts as percentages of total assets is known as

Based on audit evidence gathered and evaluated,an auditor decides to increase the assessed level of control risk from that originally planned.To achieve an overall audit risk level that is substantially the same as the planned audit risk level,the auditor would