Question 1

An increase in the risk of material misstatement would lead to which of the following responses?

Accepted Answer

A) Increase in the extent of audit procedures. 
B) Decrease in the extent of audit procedures. 
C) Earlier performance of audit procedures. 
D) No change in the extent or timing of audit procedures. 
A) Increase in the extent of audit procedures. 
B) Decrease in the extent of audit procedures. 
C) Earlier performance of audit procedures. 
D) No change in the extent or timing of audit procedures.

Question 2

If detection risk is low,the auditor is more willing to take a higher risk of the substantive audit procedures not detecting a material misstatement.

Accepted Answer

A) True 
 B)False

Question 3

Internal controls that the auditor expects to rely on to reduce substantive testing must be tested.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following approaches can be used to introduce unpredictability into the audit?

Accepted Answer

A) Assessing high risk accounts. 
B) Performing procedures on an unannounced basis. 
C) Performing the audit in the same location each year. 
D) Selecting items that would normally be tested. 
A) Assessing high risk accounts. 
B) Performing procedures on an unannounced basis. 
C) Performing the audit in the same location each year. 
D) Selecting items that would normally be tested.

Question 5

Which of the following terms best describes the numerical depiction of the relationship between control risk,inherent risk,detection risk,and audit risk?

Accepted Answer

A) Audit risk model. 
B) Risk of misstatement model. 
C) Significance model. 
D) Materiality equation. 
A) Audit risk model. 
B) Risk of misstatement model. 
C) Significance model. 
D) Materiality equation.

Question 6

Detection risk is affected by which aspects of substantive audit procedures?

Accepted Answer

A) Nature. 
B) Timing. 
C) Extent. 
D) All of the above. 
A) Nature. 
B) Timing. 
C) Extent. 
D) All of the above.

Question 7

The purpose of the auditor's consideration of the effectiveness of internal controls is to determine the nature,extent,and timing of substantive testing.

Accepted Answer

A) True 
 B)False

Question 8

Detection risk is controllable by the client.

Accepted Answer

A) True 
 B)False

Question 9

The usual length of a brainstorming session is about four hours.

Accepted Answer

A) True 
 B)False

Question 10

What procedure has to be completed at or after the end of the period?

Accepted Answer

A) Assessment of control risk. 
B) Engagement letter. 
C) Evaluation of adjusting journal entries. 
D) All procedures must be completed prior to period end. 
A) Assessment of control risk. 
B) Engagement letter. 
C) Evaluation of adjusting journal entries. 
D) All procedures must be completed prior to period end.

Question 11

Which of the following terms best describes the types and appropriateness of audit procedures used?

Accepted Answer

A) Nature of detection risk. 
B) Material misstatement risk. 
C) Nature of auditing procedures. 
D) Nature of risk response. 
A) Nature of detection risk. 
B) Material misstatement risk. 
C) Nature of auditing procedures. 
D) Nature of risk response.

Question 12

Which of the following are common brainstorming session guidelines?

Accepted Answer

A) Freedom of expression. 
B) Respectful communication. 
C) Suspension of criticism. 
D) All of the above. 
A) Freedom of expression. 
B) Respectful communication. 
C) Suspension of criticism. 
D) All of the above.

Question 13

Relationships between risks Identify how an increase in each of the following factors (assuming the other factors remain unchanged)will affect planned audit evidence. 
∙ Audit risk 
∙ Inherent risk 
∙ Control risk
∙ Detection risk

Accepted Answer

An increase in audit risk decreases plan

Question 14

Identify at least five procedures an auditor might perform to obtain an understanding of a client's business and the associated business risks.

Accepted Answer

Procedures an auditor might perform to o

Question 15

Brainstorming sessions should be led by the engagement team.

Accepted Answer

A) True 
 B)False

Question 16

What is the typical range for the setting of audit risk?

Accepted Answer

A) 1%-10% 
B) 1%-5% 
C) 0%-5% 
D) 0%-10% 
A) 1%-10% 
B) 1%-5% 
C) 0%-5% 
D) 0%-10%

Question 17

A detection risk of 90% would suggest that an auditor must perform extensive substantive audit testing.

Accepted Answer

A) True 
 B)False

Question 18

Materiality relates to the significance or importance of an item.

Accepted Answer

A) True 
 B)False

Question 19

Insistence from the CEO that she must be present at all meetings between the audit committee and internal/external auditors would cause auditors to assess inherent risk at a higher level.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following are two frequently used planning analytical procedures?

Accepted Answer

A) Reasonableness tests and economic analyses. 
B) Trend analyses and reasonableness tests. 
C) Ratio analyses and economic analyses. 
D) Ratio analyses and trend analyses. 
A) Reasonableness tests and economic analyses. 
B) Trend analyses and reasonableness tests. 
C) Ratio analyses and economic analyses. 
D) Ratio analyses and trend analyses.

An increase in the risk of material misstatement would lead to which of the following responses?

If detection risk is low,the auditor is more willing to take a higher risk of the substantive audit procedures not detecting a material misstatement.

Internal controls that the auditor expects to rely on to reduce substantive testing must be tested.

Which of the following approaches can be used to introduce unpredictability into the audit?

Which of the following terms best describes the numerical depiction of the relationship between control risk,inherent risk,detection risk,and audit risk?

Detection risk is affected by which aspects of substantive audit procedures?

The purpose of the auditor's consideration of the effectiveness of internal controls is to determine the nature,extent,and timing of substantive testing.

Detection risk is controllable by the client.

The usual length of a brainstorming session is about four hours.

What procedure has to be completed at or after the end of the period?

Which of the following terms best describes the types and appropriateness of audit procedures used?

Which of the following are common brainstorming session guidelines?

Relationships between risks Identify how an increase in each of the following factors (assuming the other factors remain unchanged)will affect planned audit evidence. ∙ Audit risk ∙ Inherent risk ∙ Control risk ∙ Detection risk

Identify at least five procedures an auditor might perform to obtain an understanding of a client's business and the associated business risks.

Brainstorming sessions should be led by the engagement team.

What is the typical range for the setting of audit risk?

A detection risk of 90% would suggest that an auditor must perform extensive substantive audit testing.

Materiality relates to the significance or importance of an item.

Insistence from the CEO that she must be present at all meetings between the audit committee and internal/external auditors would cause auditors to assess inherent risk at a higher level.

Which of the following are two frequently used planning analytical procedures?

Quality Auditing: Why It Matters

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditor

Professional Legal Liability

Professional Auditing Standards and the Audit Opinion Formulation Process

Audit Evidence

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Long-Term Liabilities and Stockholders Equity Transactions

Completing a Quality Audit

Audit Reports

Filters

Exam 7: Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

An increase in the risk of material misstatement would lead to which of the following responses?

If detection risk is low,the auditor is more willing to take a higher risk of the substantive audit procedures not detecting a material misstatement.

Internal controls that the auditor expects to rely on to reduce substantive testing must be tested.

Which of the following approaches can be used to introduce unpredictability into the audit?

Which of the following terms best describes the numerical depiction of the relationship between control risk,inherent risk,detection risk,and audit risk?

Detection risk is affected by which aspects of substantive audit procedures?

The purpose of the auditor's consideration of the effectiveness of internal controls is to determine the nature,extent,and timing of substantive testing.

Detection risk is controllable by the client.

The usual length of a brainstorming session is about four hours.

What procedure has to be completed at or after the end of the period?

Which of the following terms best describes the types and appropriateness of audit procedures used?

Which of the following are common brainstorming session guidelines?

Relationships between risks Identify how an increase in each of the following factors (assuming the other factors remain unchanged)will affect planned audit evidence. ∙ Audit risk ∙ Inherent risk ∙ Control risk ∙ Detection risk

Identify at least five procedures an auditor might perform to obtain an understanding of a client's business and the associated business risks.

Brainstorming sessions should be led by the engagement team.

What is the typical range for the setting of audit risk?

A detection risk of 90% would suggest that an auditor must perform extensive substantive audit testing.

Materiality relates to the significance or importance of an item.

Insistence from the CEO that she must be present at all meetings between the audit committee and internal/external auditors would cause auditors to assess inherent risk at a higher level.

Which of the following are two frequently used planning analytical procedures?

Quality Auditing: Why It Matters

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditor

Professional Legal Liability

Professional Auditing Standards and the Audit Opinion Formulation Process

Audit Evidence

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Long-Term Liabilities and Stockholders Equity Transactions

Completing a Quality Audit

Audit Reports

Filters