Auditing and Assurance Services, Student Value Edition (16th Edition)
16th Edition
ISBN: 9780134075754
Author: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Chris E. Hogan
Publisher: PEARSON
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Question
Chapter 15, Problem 23.2MCQ
To determine
In addition to evaluating the frequency of deviation in test of controls, an auditor should also consider certain qualitative aspects of the deviation. The auditor most likely would give additional consideration to the implications of a deviation if it was:
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Which of the following is an incorrect statement?
a. The amount of audit work should vary inversely with the likelihood of material misstatements existing in the accounting records.
b. The better the organization’s control structure, the less likely it is that material misstatements will be present
c. Complex or unusual transactions are more likely to be recorded in error than recurring or routine transactions are
d. If misstatements are likely to occur in the recording process, the auditor should develop procedures to detect misstatements.
The tolerable rate of deviation set by the auditor for tests of controls depends primarily on which of the following?
a. The planned risk of assessing control risk too low.
b. The dollar amount of substantive misstatements.
c. The anticipated cause of the errors.
d. The tolerable rate used in audits of other clients in the same industry.
If the auditor plans to assess control risk at less than the maximum and rely on controls, and the nature, timing, and extent of further audit procedures are based on that lower assessment, the auditor musta. Obtain evidence that the controls selected for testing are designed effectively and operated effectively during the entire period of reliance.b. Assess control risk at less than the maximum for all relevant assertions.c. Perform only substantive procedures.d. Provide additional examples of responses to assessed fraud risks relating to fraudulent financial reporting.
Chapter 15 Solutions
Auditing and Assurance Services, Student Value Edition (16th Edition)
Ch. 15 - Prob. 1RQCh. 15 - Prob. 2RQCh. 15 - Prob. 3RQCh. 15 - Prob. 4RQCh. 15 - Prob. 5RQCh. 15 - Prob. 6RQCh. 15 - Prob. 7RQCh. 15 - Prob. 8RQCh. 15 - Prob. 9RQCh. 15 - Prob. 10RQ
Ch. 15 - Prob. 11RQCh. 15 - Prob. 12RQCh. 15 - Prob. 13RQCh. 15 - Distinguish between the TER and the CUER. How is...Ch. 15 - Prob. 15RQCh. 15 - Prob. 16RQCh. 15 - Prob. 17RQCh. 15 - Prob. 18RQCh. 15 - Prob. 19RQCh. 15 - Prob. 20RQCh. 15 - Prob. 21RQCh. 15 - Prob. 22.1MCQCh. 15 - Prob. 22.2MCQCh. 15 - Prob. 22.3MCQCh. 15 - Prob. 23.1MCQCh. 15 - Prob. 23.2MCQCh. 15 - Prob. 23.3MCQCh. 15 - Prob. 24.1MCQCh. 15 - Prob. 24.2MCQCh. 15 - Prob. 24.3MCQCh. 15 - Prob. 25.1MCQCh. 15 - Prob. 25.2MCQCh. 15 - Prob. 25.3MCQCh. 15 - Prob. 27DQPCh. 15 - Lenter Supply Company is a medium-sized...Ch. 15 - Prob. 29DQPCh. 15 - Prob. 30DQPCh. 15 - Prob. 31DQPCh. 15 - Prob. 32DQPCh. 15 - Prob. 33DQPCh. 15 - Prob. 34DQPCh. 15 - Prob. 35DQPCh. 15 - Prob. 36CCh. 15 - Prob. 37ICA
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- Which of the following is consistent with an assessed level of control risk at below the maximum level after completing the auditors consideration of the client’s internal control over receivables? Increased materiality level in selecting receivables to be confirmed and use a positive confirmation letter. Increased materiality level in selecting receivables to be confirmed and use a negative confirmation letter. Decrease materiality level in selecting receivables to be confirmed and use a negative confirmation letter. d. Decrease materiality level in selecting receivables to be confirmed and use a positive confirmation letter.arrow_forwardWhen completing the audit of internal controls for an issuer, the severity of an internal control deficiency depends ona. Whether there is a reasonable possibility that the company’s controls will fail to prevent or detect a misstatement of an account balance or disclosure.b. Whether a misstatement has actually occurred as a result of the deficiency.c. The magnitude of the potential misstatement resulting from the deficiency or the deficiencies.d. Both a and c are correct.e. All of the above are correct.arrow_forwardIn response to an increased level of assessed risk of material misstatement, an auditor of anonissuer would generally A.Not make changes to the nature, timing, or extent of further audit procedures. B.Increase the emphasis on professional skepticism when gathering and evaluating auditevidence with the audit team. C.Perform more substantive audit procedures at an interim date instead of at period end. D.Perform additional tests of controls at an interim date to eliminate the need for substantivetests at period endarrow_forward
- Which of the following is consistent with an assessed level of control risk at below the maximum level after completing the auditors consideration of the client's internal control over receivables? * a. Increased materiality level in selecting receivables to be confirmed and use a positive confirmation letter. b. Increased materiality level in selecting receivables to be confirmed and use a negative confirmation letter. c. Decrease materiality level in selecting receivables to be confirmed and use a negative confirmation letter. d. Decrease materiality level in selecting receivables to be confirmed and use a positive confirmation letter. e. None of the abovearrow_forwardThe requirement for an attitude of scepticism means that the auditor should A) perform additional tests of controls to increase the probability of discovering fraud or errors. B) plan and conduct the audit with an attitude of distrust in management. C) not be blind to evidence that suggests the documents, books, or records have been altered or are incorrect. D) not consider management's explanation as evidence on any subjectarrow_forwardAn auditor has completed the risk assessment process for the firm and is evaluating the results. If an auditor has determined that there is a material misstatement which is potentially due to fraud, what are the steps or actions that the auditor should take at this point?arrow_forward
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