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.

Correct option is option (c). Change the planned timing of substantive tests from year-end to…

s the acceptable level of detection risk in a. Lower the assessed level of inherent ris b. Eliminate the assessed level of control Oc. Change the planned timing of substanti Od. Increase the risk of material misstatem

s the acceptable level of detection risk in a. Lower the assessed level of inherent ris b. Eliminate the assessed level of control Oc. Change the planned timing of substanti Od. Increase the risk of material misstatem

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter7: Planning The Audit: Identifying, And Responding To The Risk Of Material Misstatement

Section: Chapter Questions

Problem 27MCQ

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Similar questions

As the acceptable level of detection risk decreases, an auditor may: A. reduce substantive testing by rrelying on the assessment of inherent risk and control risk. B. postpone the planned timing of substantive tests from interim dates to the year-end. C.Eliminate the assessed level of inherent risk from consideration as a planning factor. D. lower the assessed level of control risk
As the acceptable level of detection risk decreases, an auditor may change the a. Timing of substantive tests by performing them at an interim date rather than at year-end. b. Assessed level of control risk. c. Timing of tests of controls by performing them at several dates rather than at one time. d. Assessed level of inherent risk to a higher amount. e. Nature of substantive procedures from a less effective to a more effective procedure.
On the basis of audit evidence gathered and evaluated, an auditor decides to decrease the level of detection risk from that originally planned. Assuming the same planned audit risk level, the change in the planned detection risk most likely resulted from a[n) A. Increase in the assessed control risk B.Increase in materiality levels. C. Decrease in the assessed inherent risk D.Decrease in the assessed citrol risk.
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.
If the tests of controls indicate certain controls are not as effective as the auditor originally believed, which of the following will result? Select all that apply. O increased number of substantive procedures will be planned O audit planning strategy adjusted O control risk will be increased O detection risk is increased O increased number of control tests will be performed
As the risk of material misstatement increases, the amount of evidence the auditor will accumulate should: Oc. Stay the same b. Increase a. Decrease d. Is indeterminate
Which of the following is appropriate about risk assessment? A. The assessed level of inherent and control risk can be sufficiently low, thus resulting to eliminating the need for substantive tests. B. Audit risk may be more effectively determined by assessing inherent and control risk separately. C. Detection risk is eliminated if an auditor were to examine 100 percent off the account balance or class of transactions. D. There is an iverse relationship between detection risk and the combined level of inherent and control risk
(c) Using your knowledge of the relationships among acceptable audit risk, inherent risk, control risk, planned detection risk, performance materiality, and planned evidence, State the effect that changing each of the following factors, while the other factors remain unchanged will have on planned work and evidence (state whether it will increase or decrease the planned audit work and evidence ) 1. an increase in acceptable audit risk 2. an increase in inherent risk 3. a decrease in control risk 4. an increase in planned detection risk 5. an increase in performance materiality
Once the auditor detects a control deficiency, which of the following steps must he or shetake first?a. Perform tests of other controls related to the same assertion as the control deemedineffective.b. Evaluate the severity of the deficiency on the auditor’s control risk assessment for thatassertion.c. Modify the planned substantive procedures as a result of the deficiency.d. Test the deficient control, assuming a maximum level of risk.
Based on evidence gathered and evaluated, an auditor decides to increase the assessedlevel of control risk from that originally planned. To achieve an overall audit risklevel that is substantially the same as the planned audit risk level, the auditor could(1) decrease detection risk. (3) decrease substantive testing.(2) increase materiality levels. (4) increase inherent risk.
If tests of controls induce the audit team to change the assessed level of control risk for fixed assets from 0.4 to 1.0 and audit risk (0.05) and inherent risk remain constant, the acceptable level of detection risk is most likely toa. Change from 0.1 to 0.04.b. Change from 0.2 to 0.3.c. Change from 0.25 to 0.1.d. Be unchanged.
Which of the following regarding the level of materiality is correct? Select one: a. An increase in materiality will decrease the amount of substantive testing b. In order to decrease detection risk, the auditor would increase materiality. c. A higher risk of material misstatement will require an increase in materiality d. A decrease in materiality will result in a decrease in the cost of an audit