An auditor must compensate for a weakness in the internal control by increasing the
Auditors begin their assessments of inherent risk during the planning phase. Which of the following would not be a topic of the planning phase which would also help to assess inherent risk?
Which of the following statements is not correct?
When an auditor believes that an understanding with the client has not been established, he or she should ordinarily
An auditor manages audit risk by performing the following, except
It is the susceptibility of an account balance or class of transactions to misstatement that could be material, individually or when aggregated with misstatements in other balances or classes, assuming that there were no related internal controls.
The steps that an audit firm should take prior to accepting an audit engagement include all of the following except
A proposed assurance engagement can be accepted when the practitioner’s preliminary knowledge about the engagement circumstances indicates that relevant ethical requirements will be satisfied and
I. The subject matter of the engagement is appropriate.
II. The criteria to be used are suitable and are available to the intended users. III. The practitioner has access to sufficient appropriate evidence to support the conclusion. IV. The conclusion is to be contained in a written report. V. There is a rational purpose for the engagement.
A. I, II, and 111 only
B. I, II, III, and IV only
C. I, 11, IV, and V only
D. I, II, III, IV, and V
One of the typical characteristics of management fraud is
The risk that the auditor’s own work will lead to the decision that material misstatements do not exist in the financial statements, when in fact such misstatements do exist, is
Which of the following would a successor auditor ask the predecessor auditor to provide after accepting an audit engagement?
The following are control environment factors, except
When setting a preliminary judgement about materiality
Which of the following is a management assertion regarding account balances at the period end?
Which of the following would be considered an analytical procedure?
Holding other planning considerations equal, a decrease in the amount of misstatements in a class of transactions that an auditor could tolerate most likely would cause the auditor to
Which of the following types of risk increases when an auditor performs substantive analytical audit procedures for financial statement accounts at an interim date?
The preliminary judgment about materiality
If the planned detection risk is reduced, the amount of evidence the audit accumulates will
Which of the following tests of controls would most likely be performed by an auditor to obtain evidence about management’s assertion concerning the completeness of sales transactions?
Fraud refers to an intentional act by one or more individuals among management, employees or third parties, which results in a misrepresentation of financial statements while error refers to unintentional mistakes in financial statements. Fraud may involve
Manipulation, falsification or alteration of records or documents. Misappropriation of assets. Mathematical or clerical mistakes in the underlying records and accounting data. Suppression or omission of the effects of transactions from records or documents. Oversight or misinterpretation of facts Recording of transactions without substance. Misapplication of accounting policies.
A. 1, 2, 4, 6, and 7.
B. 1, 2, 3, and 6.
C. 1, 2, 3, 4, 6, and 7.
D. 1, 2, 4, 5, and 6.
Auditing standards require that auditors be aware of relevant factors relating to fraudulent financial reporting. Which of the following statements is false concerning fraudulent financial reporting?
Audit risk is the risk that the auditor expresses an inappropriate audit opinion when the financial statements are materially misstated. Audit risk is a function of the
If the objective of a test of details of transactions is to detect overstatements of sales, the auditor’s direction of testing should be from the
The principle of professional competence and due care imposes which of the following obligations on professional accountants?