All of the following are possible responses to a pervasive weakness in internal control except: Multiple Choice Assign more experienced personnel to the engagement. Increasing the level of supervision on the engagement. Increase the size of a sample for certain tests in the engagement. Adding an element of unpredictability to the procedures performed.

All of the following are possible responses to a pervasive weakness in internal control except: Multiple Choice Assign more experienced personnel to the engagement. Increasing the level of supervision on the engagement. Increase the size of a sample for certain tests in the engagement. Adding an element of unpredictability to the procedures performed.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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7) In an environment that is highly automated an auditor determines that it is not possible to reduce detection risk solely by using substantive test of transactions. Under these circumstances the auditor most likely would: Perform test of controls to support a lower level of assessed risk. Increase sample size to reduce sampling risk and detection risk. Adjust the materiality level and consider the effect on inherent risk Apply analytical procedures and consider the effect on control risk
Strong internal control will increase the reliability of certain types of evidence and thereby increase the overall quantity of substantive procedures performed by the auditors. True or False True False
As the acceptable level of detection risk increases, an auditor may: Oa. Lower the assessed level of inherent risk. O b. Eliminate the assessed level of control risk from consideration as a planning factor. O c. Change the planned timing of substantive tests from year-end to interim. Od. Increase the risk of material misstatement.
Why do we consider risk assessment the foundation of the internal audit function? To safeguard independence, many internal audit departments continue to perform risk assessments in a silo, without collaborating with and leveraging the work of ERM. Do you agree with this approach?
The auditors' working papers will generally be least likely to include documentation showing how the: Multiple Choice engagement had been planned. client's schedules were prepared. client's internal control structure had been considered. unusual matters were resolved.
When is more frequent monitoring of internal controls not required?* When employees are poorly trained. When the control activity and risk being managed are important. When a department is making changes to an application being used in that department. When internal controls have recently been changed to reduce the frequency of errors.
In a non public audit (AICPA), auditors might chose to not test controls if Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Design of control is weak/deficient, Controls Risk is High, or High cost of testing I/C b Design of control is strong/effective, Control Risk is low or low cost of testing
The difference between assessing control risk for IT control activities versus assessing control risk for manual control activities is best described as follows: Multiple Choice О in a manual environment it is important for the auditor to gain an understanding of the internal control activity before assessing control risk. О in an IT environment, it is not important to gain an understanding of the internal control activity before assessing control risk. О In an IT environment, it is likely that control risk will be assessed as low on largely all audit engagements. О the assessment process that needs to be undertaken for IT controls is essentially the same as would be taken for manual controls.