Which of the following is correct about control risk? Select one: a. None of the above b. It is the same as inherent risk. c. It is an alternative to substantive testing d. 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.

Which of the following is correct about control risk? Select one: a. None of the above b. It is the same as inherent risk. c. It is an alternative to substantive testing d. 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.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

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, Assessing, And Responding To The Risk Of Material Misstatement

Section: Chapter Questions

Problem 9RQSC: How does inherent risk relate to internal controls? Why is it important to assess inherent risks of...

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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.
Which of the following risks does the auditor least control? a. inherent risk b. control risk c. detection risk d. all are equally controllable
Which of the following is not a principle relating to risk assessment? a. Identifies and analyses risks and respond to changes b. Designing the information systems c. Specifies objectives with sufficient clarity d. Considers the potential for fraud in assessing risks
There is no need to perform substantive tests procedures if the control risk is determined to be less than high level. TRUE OR FALSE? WHY?
An auditor assesses control risk because it: A. is relevant to the auditor's understanding of the control environment B. provides assurance that the auditor's materiality levels are appropriate. C. indicates to xthe auditor where inherent risk may be the greatest. D. affects the level of detection risk that the auditor may accept.
5) What are common limitations of Internal Controls? a) Human Error b) Human Fraud c) Cost-Benefit Principle d) A, B, and C e) A and B only
Actions that may be taken to address risks include acceptance, avoidance, mitigation or transfer. a) True b) False
Which of the following conditions is not necessary for a fraud to occur?Select one:a. Explanationb. Pressurec. Opportunityd. Rationalization
Assuming a lack of internal control in a client's system, the risk of material misstatement is known as? O Inherent risk Client risk O Detection risk O Audit risk
A related party transaction is a transfer of resources, services, or obligations between related parties when no consideration is involved. The auditor assesses control risk as high or at the maximum level when the internal controls of the client have not been effectively designed or have not operated effectively. Group of answer choices False, False True, False True, True False, True
Which of the following does NOT describe inherent risk? O tends to be driven by the nature of the business or account O risk a misstatement occurs irrespective of any controls determined by the effectiveness of internal controls O auditor cannot influence inherent risk
The ultimate purpose of a test of controls is to obtain reasonable assurance that an assertion is presented fairly in all material respects. O True O False