Which of the following does NOT accurately describe detection risk? assessed as low when control risk and inherent risk are assessed as high O increases in indirect proportion to the amount of substantive testing performed O inverse relationship between detection risk and the auditor's assessed risk of material misstatement O risk that the auditor's testing procedures will not detect a material misstatement

Which of the following does NOT accurately describe detection risk? assessed as low when control risk and inherent risk are assessed as high O increases in indirect proportion to the amount of substantive testing performed O inverse relationship between detection risk and the auditor's assessed risk of material misstatement O risk that the auditor's testing procedures will not detect a material misstatement

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: In response to an increased level of assessed risk of material misstatement, an auditor of…

A: The auditor shall perform RAP i.e Risk Assessment Procedure that provides a reasonable assurance…

Q: The auditor attempts to correct for the risk of under-auditing (ineffectiveness) and over-auditing…

A: Auditing is the process of examining financial statements, records, and other financial information…

Q: This term is synonymous with acceptable audit risk.

A: Explanation and answer is given below,

Q: 10. The acceptable level of detection risk is inversely related to the A. Assurance provided by…

A: Detection risk is the risk that an auditor's procedures will not detect a material misstatement in…

Q: True or False? Regardless of the rating scale used for an audit report, the audit rating will…

A: An audit is a methodical disquisition, review, or evaluation of an association's processes,…

Q: Which of the following increase control risk?

A: The answer for the multiple choice question and relevant explanation are presented hereunder : What…

Q: Which of the following regarding the level of materiality is correct? Select one: a. An increase in…

A: Materiality is a concept used in auditing to determine the significance or importance of an item or…

Q: If the tests of controls indicate certain controls are not as effective as the auditor originally…

A: Test of controls are performed to determine the effectiveness of the control to detect and correct…

Q: Which statement is false

A: Meaning of Internal control The process designed, implemented and maintained by those charge with…

Q: As the risk of material misstatement increases, the amount of evidence the auditor will accumulate…

A: Risk of Material Misstatement: This implies a risk that the company's financial statements are…

Q: As the acceptable level of detection risk decreases, an auditor may change the a. Timing of…

A: Introduction:- Acceptable audit risk is the risk that the auditor is ready to take of giving an…

Q: For a particular account balance assertion, the auditor is most likely to be able to avoid…

A: Auditors utilize tests of details to gather proof that the balances, disclosures, and underlying…

Q: A) Consider the likelihood that identified risks could result in material misstatement B) Identify…

A: In order to assess Control Risk/the risk of material misstatement, the auditor would complete all of…

Q: Explain when performing an auditor, the auditor could sometimes be permitting the sum of the…

A: Verifying and certifying financial statements through auditing helps to assure their accuracy and…

Q: The risk that audit evidence for a segment will fail to detect misstatements exceeding tolerable…

A: Audit evidence refers to all sorts of information, or bunch of documents or any sort of data…

Q: maximur

A: the auditor after considering the client's internal control over receivables increased the…

Q: aterial misstatement exists when it does not exist the risk that an auditor incorrectly…

A: Risk of incorrect rejection is defined as the risk that the auditor concludes that a…

Q: The auditor is typically concerned with two major types of mistakes that materially impact the…

A: Option A) Risk of Assessing Control Risk Too Low/Risk of Incorrect Rejection is incorrect because…

Question

100%

Which of the following does NOT accurately describe detection risk?
O assessed as low when control risk and inherent risk are assessed as high
O increases in indirect proportion to the amount of substantive testing performed
O inverse relationship between detection risk and the auditor's assessed risk of material misstatement
O risk that the auditor's testing procedures will not detect a material misstatement

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Audit Strategy, Audit Planning and Audit Programme

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

9
Applying substantive tests to the details of asset and liability accounts as of an interim date, rather than as the balance sheet date: Eliminates the use of certain statistical sampling methods that would otherwise be available, Presumes that the auditor will reperform the tests as of the balance sheet date, Should be especially considered when there are rapidly changing economic conditions, Potentially increases the risk that errors which exist at the balance sheet date will not be detected
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
What is another way of saying "Interest earned on interest"?
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
In audit sampling applications, sampling risk isa. A characteristic of statistical sampling applications but not of nonstatistical applications.b. The probability that the audit team will fail to recognize erroneous accounting in the client’sdocumentation.c. The probability that accounting misstatements will arise in transactions and enter theaccounting system.d. The probability that an audit team’s conclusion based on a sample might be differentfrom the conclusion based on an audit of the entire population.
Financial audit Q&A What risks that may occur during assertion testing, but cannot be prevented due to the lack of time?
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.
When Arthus Andersen audited Enron, they should have recognized an acceptable level of detection risk is inversely related to the: a. Assurance provided by substantive testing b. Risk of misappliction of audit procedure c. Preliminary judgement bout lateriality levels d. Risk of failing to discover material misstatements.
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.
What is “tolerable misstatement”? How is this concept applied when auditors perform audit tests on a sample?