If there is a detection of one control deviation, the auditor can do which of the following?a. Increase the sample sizeO b. Test a compensation controlOc. Amend the auditor's decision to rely on the controlO d. All of the above are options for an auditor responding to detection of a control deviatic

Internal controls are the policies, procedures, and practices put in place by an organization to…

If there is a detection of one control deviation, the auditor can do which of the following? O a. Increase the sample size O b. Test a compensation O c. O d. control Amend the auditor's decision to rely on the control All of the above are options for an auditor responding to detection of a control deviatio 2

If there is a detection of one control deviation, the auditor can do which of the following? O a. Increase the sample size O b. Test a compensation O c. O d. control Amend the auditor's decision to rely on the control All of the above are options for an auditor responding to detection of a control deviatio 2

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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Question

If there is a detection of one control deviation, the auditor can do which of the following?
a. Increase the sample size
O b. Test a compensation control
Oc. Amend the auditor's decision to rely on the control
O d. All of the above are options for an auditor responding to detection of a control deviatic

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The risk that audit evidence for a segment will fail to detect misstatements exceeding tolerable misstatement is: Audit risk Inherent risk Planned detection risk O Control risk
What are the risks if the auditor concludes controls are operating effectively based on the sample and Control Risk is set too low?
The audit team will choose to reduce the reliance on controls if the _____ is greater than the _____a. Tolerable rate of deviation; upper limit rate of deviation.b. Upper limit rate of deviation; tolerable rate of deviation.c. Expected population deviation rate; tolerable rate of deviation.d. Tolerable rate of deviation; expected population deviation rate.
Which of the following is true when the auditor determines the client has a low risk of material misstatement? O increased reliance on substantive tests of transactions and account balances O increased reliance on testing of controls O detection risk is assessed as low O inherent risk is assessed as high
Risk of incorrect rejection is defined as _______. the risk that the auditor concludes that a material misstatement does not exist when it does exist the risk that the auditor concludes that a material misstatement exists when it does not exist the risk that an auditor incorrectly rejects a client the risk that management may reject the audit opinion issued by the auditor An advantage of statistical sampling _______. is that it allows an auditor to measure control risk is that it allows an auditor to measure sampling risk is that it allows an auditor to measure inherent risk is that it is cheaper to perform, resulting in lower audit fees for the client
The more assurance the auditor wants, _______. A. the less representative a sample should be of the population, and the more testing the auditor needs to do B. the more representative a sample should be of the population, but the less testing the auditor needs to do to gain efficiency C. the more representative a sample should be of the population, and the more testing the auditor needs to do D. the less representative a sample should be of the population, and the less testing the auditor needs to do
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9
When an auditor decreases the planned assessed level of control risk because certain control procedures were determined to be more effective than anticipated, the auditor would most likely increase the: a. Extent of tests of details. b. Level of inherent risk. c. Extent of tests of controls. d. Level of detection risk.
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
When an audior increases the assessed level of control risk because certain control activities were determined to be ineffective, the auditor would most likely increase the: A. extent of tests of control B. level of detection risk C. extent of tests of detail D. Level of inherent risk
The F-test is sensitive to the assumption that the underlying samples are normally distributed. Select one: True False