Loose-leaf For Auditing & Assurance Services: A Systematic Approach
11th Edition
ISBN: 9781260687637
Author: William F Messier Jr, Steven M Glover Associate Professor, Douglas F Prawitt Associate Professor
Publisher: McGraw-Hill Education
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Question
Chapter 4, Problem 4.12RQ
To determine
Concept Introduction:
Misstatements are incorrect entries or disclosures in financial statement. A misstatement may be due fraud or error on the part of the management. The auditor covers all the material misstatements during the process of its audit.
To indicate:The response of the auditor for pervasive risk of material misstatements.
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Students have asked these similar questions
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
Which of the following factors do NOT impact the auditor's decision on the mix of substantive procedures to be performed?
O overall risk assessment for the client
O nature of the account balance
O management's opinion on the risk of the account balance
O risk assessment for the specific account balance
Define the danger of substantial misrepresentation. RMM is measured by auditors at what level of the financial statements? Explain how auditors evaluate the RMM. What part of substantive testing does RMM play?
Chapter 4 Solutions
Loose-leaf For Auditing & Assurance Services: A Systematic Approach
Ch. 4 - Prob. 4.1RQCh. 4 - Prob. 4.2RQCh. 4 - Prob. 4.3RQCh. 4 - Prob. 4.4RQCh. 4 - Prob. 4.5RQCh. 4 - Prob. 4.6RQCh. 4 - Prob. 4.7RQCh. 4 - Prob. 4.8RQCh. 4 - Prob. 4.9RQCh. 4 - Prob. 4.10RQ
Ch. 4 - Prob. 4.11RQCh. 4 - Prob. 4.12RQCh. 4 - Prob. 4.13MCQCh. 4 - Prob. 4.14MCQCh. 4 - Prob. 4.15MCQCh. 4 - Prob. 4.16MCQCh. 4 - Prob. 4.17MCQCh. 4 - Prob. 4.18MCQCh. 4 - Prob. 4.19MCQCh. 4 - Prob. 4.20MCQCh. 4 - Prob. 4.21MCQCh. 4 - Prob. 4.22MCQCh. 4 - Prob. 4.23PCh. 4 - Prob. 4.24PCh. 4 - Prob. 4.25PCh. 4 - Prob. 4.26PCh. 4 - Prob. 4.27PCh. 4 - Prob. 4.28PCh. 4 - Prob. 4.29PCh. 4 - Prob. 4.30PCh. 4 - Prob. 4.31PCh. 4 - Prob. 4.32P
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Similar questions
- Which of the following factors is not an example of a risk relevant to the client continuance decision? a. Client entity characteristics. b. Independence risk factors. c. Third-party/due diligence risk factors. d. Advocacy threat.arrow_forwardWould it be possible to be objective when auditing a friend's financial statements? If you think, so, tell us why. If not, then describe the impediments you might encounter.arrow_forwardDo you think that the provision of nonaudit services for a client with a failed audit is evidence of negligence? Explain.arrow_forward
- Which 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_forwardThe risk that an auditor issues a clean opinion when the financial statements are materially misstated is called O inherent risk. control risk. audit risk. O detection risk.arrow_forward2. A client has departed from GAAP for what you, the auditor, considers to be justifiable. The financial statements would have been misleading if the client had not departed from GAAP. Circumstance: Type of Opinion:arrow_forward
- Which of the following statements is NOT correct about materiality?Select one: a. Auditor’s consideration of materiality is influenced by the auditor’s perception of the needs of an informed decision maker who will rely on the financial statements b. Materiality is a relative concept c. Materiality judgments involve both quantitative and qualitative judgments d. At the planning state, the auditor considers materiality at the financial statement level onlyarrow_forwardtch 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.arrow_forwardWhat is in the nature of work of an auditor that puts his or her safety at risk? Answer in your own wordsarrow_forward
- What possible actions would an auditor might take if a client’s financial statements depart from GAAP. Would the demand for assurance services increase or decrease in the future?arrow_forwardThe audit risk model includes the four risks listed below. Match 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.arrow_forwardWhich 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 riskarrow_forward
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