Exam 2: The Audit Planning Process: Understanding the Risk of Material Misstatement

Generally accepted auditing standards require the auditor to obtain sufficient appropriate audit evidence to reduce audit risk to an acceptable level.If the auditor determines that he cannot comply with this standard due to the risk level present in the client before the engagement,he will

When an auditor signs an engagement letter

One of the considerations in establishing an audit strategy is?

The audit risk model is a theoretical model designed to guide the decision process of the auditor.The model could be used as an equation to calculate detection risk,but it is probably more useful to think of the model as expressing relationships among the risks included in the model.Some of these relationships include

The auditing standards describe how an auditor determines if the preconditions for an audit are present.Which of the following would be a precondition for an audit?

In the planning process,the auditor assesses the risk that misstatements have occurred in the financial statements.The source of misstatements includes

The auditing standards determine how an auditor describes if the procedures for an audit are present.

Much of the information regarding material misstatement in the company is obtained from management.However,the auditor may find it useful to talk to employees at different levels of authority such as

How does the auditor use the information from the risk assessment procedures?

Which of the following statements best describe a misstatement?

Observation and inspection may provide the auditor with useful information to support the information obtained from management and other employees related to the risk of material misstatement.The auditor might observe or inspect

In the request for information from the predecessor auditor,the new auditor may ask for information about the following item

The audit risk model is a theoretical model designed to guide the decision process of the auditor.The model could be used as an equation to calculate detection risk,but it is probably more useful to think of the model as expressing relationships among the risks included in the model.Some of these relationships include

Which of the following statements is correct about the objective of the audit process?

When a client hands the financial statements to the auditor,he makes the following assertion about the financial statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America or international financial reporting standards.

Which of the following statements best describes a misstatement?

How does the auditor gain an understanding of the entity and its environment? The auditing standards require the auditor to understand

Which of the following is not a method that the auditor might use to calculate materiality?

The auditor designs the risk assessment procedures that he believes will be effective in assessing the risk of material misstatement for the entity.According to the auditing standards,the risk assessment process should include