AUDITING-TEXT (LOOSELEAF)
11th Edition
ISBN: 9781337619462
Author: JOHNSTONE
Publisher: CENGAGE L
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Chapter 3, Problem 15CYBK
To determine
Introduction: Business risk is a risk that exposes a company to the factors that lead to lowering its profits. This risk factor can be associated with internal or external factors.The risk cannot be eliminated but various steps can be taken to reduce its impact.
To choose: Out of the given statements, which statement is false.
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Students have asked these similar questions
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 risk that a client's financial statements are susceptible to material misstatements is
a. control risk
b. inherent risk
c. audit risk
d. none of the above
tch 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.
Chapter 3 Solutions
AUDITING-TEXT (LOOSELEAF)
Ch. 3 - Prob. 1CYBKCh. 3 - Prob. 2CYBKCh. 3 - Which of the following are affected by the quality...Ch. 3 - Prob. 4CYBKCh. 3 - Prob. 5CYBKCh. 3 - Prob. 6CYBKCh. 3 - What are the components of internal control per...Ch. 3 - Prob. 8CYBKCh. 3 - Prob. 9CYBKCh. 3 - The control environment is seen as the foundation...
Ch. 3 - Prob. 11CYBKCh. 3 - Which one of the following components of internal...Ch. 3 - Prob. 13CYBKCh. 3 - Prob. 14CYBKCh. 3 - Prob. 15CYBKCh. 3 - Prob. 16CYBKCh. 3 - Prob. 17CYBKCh. 3 - Prob. 18CYBKCh. 3 - Prob. 19CYBKCh. 3 - Prob. 20CYBKCh. 3 - Prob. 21CYBKCh. 3 - Prob. 22CYBKCh. 3 - Prob. 23CYBKCh. 3 - Prob. 24CYBKCh. 3 - Prob. 25CYBKCh. 3 - Prob. 26CYBKCh. 3 - Prob. 27CYBKCh. 3 - Prob. 28CYBKCh. 3 - Prob. 29CYBKCh. 3 - Prob. 30CYBKCh. 3 - Prob. 31CYBKCh. 3 - Prob. 32CYBKCh. 3 - Prob. 33CYBKCh. 3 - Prob. 34CYBKCh. 3 - Prob. 35CYBKCh. 3 - Prob. 36CYBKCh. 3 - Prob. 37CYBKCh. 3 - Prob. 38CYBKCh. 3 - Prob. 39CYBKCh. 3 - Prob. 40CYBKCh. 3 - Prob. 1RQSCCh. 3 - Prob. 2RQSCCh. 3 - Prob. 3RQSCCh. 3 - Prob. 4RQSCCh. 3 - Distinguish between entity-wide and transaction...Ch. 3 - Refer to Exhibit 3.2. List the principles...Ch. 3 - Prob. 7RQSCCh. 3 - Prob. 8RQSCCh. 3 - Prob. 9RQSCCh. 3 - Prob. 10RQSCCh. 3 - Refer to Exhibit 3.3. For each risk assessment...Ch. 3 - Prob. 12RQSCCh. 3 - Prob. 13RQSCCh. 3 - Prob. 14RQSCCh. 3 - Prob. 15RQSCCh. 3 - Prob. 16RQSCCh. 3 - Prob. 17RQSCCh. 3 - Prob. 18RQSCCh. 3 - Authorization of transactions is a key control in...Ch. 3 - Prob. 20RQSCCh. 3 - Prob. 21RQSCCh. 3 - Prob. 22RQSCCh. 3 - Prob. 23RQSCCh. 3 - Prob. 24RQSCCh. 3 - Prob. 25RQSCCh. 3 - Prob. 26RQSCCh. 3 - Prob. 27RQSCCh. 3 - Prob. 28RQSCCh. 3 - Refer to Exhibit 3.9. What are the important...Ch. 3 - Refer to Exhibit 3.10 and Exhibit 3.11. Describe...Ch. 3 - Prob. 31RQSCCh. 3 - Prob. 32RQSCCh. 3 - Prob. 33RQSCCh. 3 - Prob. 34RQSCCh. 3 - Assume that management is gathering evidence as...Ch. 3 - Prob. 36RQSCCh. 3 - Prob. 37RQSCCh. 3 - Prob. 38RQSCCh. 3 - Prob. 39RQSCCh. 3 - Prob. 40RQSCCh. 3 - Prob. 39FFCh. 3 - Diamond Foods, Inc. (LO 8, 9) In February 2012,...
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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
- How does inherent risk relate to internal controls? Why is it important to assess inherent risks of material misstatement prior to evaluating the quality of an organization’s internal controls?arrow_forwardDo you think the concept of materiality is incompatible with ethical behavior? Consider in your answer how materiality judgments affect risk assessment in an audit of financial statements.arrow_forwardWhich of the following is not an underlying principle related to risk assessment? OA. The organization should have clear objectives in order to be able to identify and assess the risks relating to the objectives. OB. The organization should monitor changes that could impact internal controls. OC. The organization should consider the potential for fraudulent behavior. OD. The auditors should determine how the company's risks should be managed.arrow_forward
- Which statement is false? a. If control risk is assessed as low, the auditor cannot plan on relying on the controls to increase substantive procedures for account balances. b. The auditor will not perform tests of controls; instead, the auditor must plan for substantive procedures, without relying on the client's internal controls. c. Based on obtaining an understanding through risk assessment procedures, the auditor assesses control risk ranging from high (weak controls) to low (strong controls). d. Assessing control risk as high means the auditor does not have confidence that internal controls will prevent or detect material misstatements; assessing control risk as low has the opposite implication.arrow_forwardWhich is not a Risk Assessment Procedure? a. Ratio Analysis b. Observation of Activities c. Account Receivable confirmations d. Inspection of Documents e. Inquiry of Internal Auditorsarrow_forwardWhich of the following does NOT describe substantive procedures? O includes inspection, inquiry, and confirmation O also known as substantive testing or tests of details O influenced by the overall risk assessment O designed to obtain indirect evidence of information included in the financial statementsarrow_forward
- The risk of a material misstatement in the financial statements arising due to error or omission as a result of factors other than the failure of controls is called: a. Control Risk b. Inherent Risk c. Audit Risk d. Detection Riskarrow_forwardWhich 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.arrow_forwardIn order to eliminate ethical fraud concerns, what procedures or policies should be implemented?arrow_forward
- the susceptibility of an account balance or class of transactions to misstatements that could be material, individually or when aggregated with misstatements in other balances or classes, assuming that there were no related internal control is called : Select one: a. control risk b. audit risk c. detection risk d. inherent riskarrow_forwardAssuming 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 riskarrow_forwardWhich of the following is NOT an example of a significant deficiency in internal control? O evidence of an effective response to identified significant risks O misstatements not prevented or detected by internal controls O evidence of an ineffective entity risk assessment process O identification of management fraudarrow_forward
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