Audit committeeAudit planConfirmationCutoffInherent riskMisappropriation of assets representation of managementRiskSubstantive proceduresTest of controls 2Select the necessary words from the list of possibilities to complete the following statements.Statements1. Audit risk at the account balance level consists of three components: (1)(2) control risk and (3) detection risk.The auditors must assess the risk of material misstatement of financial statements due to the two types of fraud, fraudulent financial2.reporting and3. Theprovides an overview which includes the nature, timing and extent of procedures to be performed in an audit.The authenticity and accuracy of an account receivable may be tested by4.with the debtor, or by vouching entries in theaccount to supporting documents.5. The termrefers to the process of determining that transactions are reflected in the proper accounting period.Performing certain audit procedures at an interim date, rather than at the balance sheet date, results in additional6.be controlled by the auditors.that i7. Assertions arethat are set forth in the financial statements.8. Tests of balances and transactions designed to detect material misstatements are called

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Audit committee Audit plan Confirmation Cutoff Inherent risk Misappropriation of assets representation of management Risk Substantive procedures Test of controls

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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Financial audit Q&A What risks that may occur during assertion testing, but cannot be prevented due to the lack of time?
Entity-level controls can have a pervasive effect on the entity's ability to meet the control criteria. Which one of the following is not an entity-level control? A. The period-end financial reporting process B. Controls to monitor results of the operations C. Controls to monitor the inventory taking process D. Management's risk assessment process
When completing the audit of internal controls for an issuer, the severity of an internal control deficiency depends ona. Whether there is a reasonable possibility that the company’s controls will fail to prevent or detect a misstatement of an account balance or disclosure.b. Whether a misstatement has actually occurred as a result of the deficiency.c. The magnitude of the potential misstatement resulting from the deficiency or the deficiencies.d. Both a and c are correct.e. All of the above are correct.
Financial audit Q&A What is the audit assertion underlying the vouching procedure?
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Give examples of tests of controls to test theoperating effectiveness of internal controlsin the revenue and collection cycle
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