Inventory is the most valuable asset for a company. The company applies controls over inventory for its safeguard and detection of inventory frauds. The auditor also tests these controls to determine the nature and extent of the audit procedures applied for audit of inventories. Audit risk is a risk that audit may provide an inappropriate opinion on the basis of his findings during the audit. There are some inherent risks and avoidable risk which result in an audit risk. To choose: The correct option.

Question

Want to see the full answer?

Answer 1

Question

Chapter 14, Problem 14.14MCQ

To determine

Concept Introduction:

Inventory is the most valuable asset for a company. The company applies controls over inventory for its safeguard and detection of inventory frauds. The auditor also tests these controls to determine the nature and extent of the audit procedures applied for audit of inventories.

Audit risk is a risk that audit may provide an inappropriate opinion on the basis of his findings during the audit. There are some inherent risks and avoidable risk which result in an audit risk.

To choose: The correct option.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Which of the following procedures would maintain threats at an acceptable level and not impair independence? Recording transactions to an attest client's general ledger when the member has determined or approved the account classifications for the transaction. Posting member - coded transactions to an attest client's general ledger. Preparing financial statements based on information in the attest client's trial balance. Posting member - approved journal or other entries to an attest client's trial balance.

This is a process of evaluating the effectiveness of a client's internal controls in preventing or detecting material misstatements in the financial statements is called __________________ (answer in All CAPS)

When planning the audit of internal controls for an issuer, the audit team shoulda. Identify significant accounts, locations, and assertions.b. Conduct a walkthrough of the internal control process.c. Make inquiries of employees regarding the existence of control activities.d. Reperform control activities performed by client employees to determine theireffectiveness.