The susceptibility of an assertion about a class of transaction, account balance or disclosure to a misstatement that could be material either individually or when aggregated with other misstatement, before consideration of any related control is defined as Inherent Risk Control Risk Detection Risk Audit Risk

The susceptibility of an assertion about a class of transaction, account balance or disclosure to a misstatement that could be material either individually or when aggregated with other misstatement, before consideration of any related control is defined as Inherent Risk Control Risk Detection Risk Audit Risk

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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Similar questions

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
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
Recall the definition of inherent risk. Why is it important for internal auditors to focus on inherent risk during the planning phase of an assurance engagement?
How do the professional audit standards differ for (a) errors, (b) frauds, (c) direct-effect noncompliance, and (d) indirect-effect noncompliance?
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
Financial audit Q&A What risks that may occur during assertion testing, but cannot be prevented due to the lack of time?
The audit risk model includes the four risks listed below. Match the type of risk with the related definition.A. Detection riskB. Control riskC. Inherent riskD. Audit risk___ 1. The probability that an auditor will give an inappropriate opinion on financial statements.___ 2. The probability that audit procedures will fail to produce evidence of material misstatements.___ 3. The probability that the client's internal control policies and procedures will fail to detect material misstatements if they have entered the accounting system.___ 4. The probability that material misstatements have occurred in transactions entering the accounting system.
Auditors frequently refer to the terms audit assurance, overall assurance, and level of assurance to refer to Detection risk O Audit report risk Acceptable audit risk O Inherent risk
Aside from documenting his/her understanding of the internal control structure, the auditor should also document the assessed level of control risk. True or false? why?
Which of the following is correct about control risk? Select one: a. None of the others b. The risk that a material misstatement could occur in a relevant assertion and not be prevented or detected on a timely basis by the entity’s internal control. c. It is an alternative to substantive testing d. It is the same as inherent risk.
Why is the audit team more concerned with controlling the exposure to the risk of overreliancethan with the risk of underreliance?a. Only the risk of overreliance results in an incorrect audit decision.b. The risk of underreliance is not related to the audit team’s study and evaluation of internalcontrol.c. The risk of overreliance can ultimately result in the audit team’s failing to reduce auditrisk to acceptable levels.d. The risk of underreliance can be controlled by performing tests of controls during theinterim period.