Auditing: A Risk Based-Approach to Conducting a Quality Audit
10th Edition
ISBN: 9781305080577
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: South-Western College Pub
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Question
Chapter 6, Problem 11TFQ
To determine
Introduction: Audit evidence is proof that an auditor tries to seek from an organization in order to claim that the assertions related to financial transactions are correct.
To state: Whether the given statement is true or false.
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Students have asked these similar questions
Many auditors assert that certain audit tests can be significantlyreduced for clients with adequate perpetual records that include both unit and cost data.What are the most important tests of the perpetual records that the auditor must makebefore reducing assessed control risk? Assuming the perpetuals are determined to beaccurate, which tests can be reduced?
When obtaining an understanding of an entity’s internal control, an auditor should concentrate on the substance ofcontrols rather than their form because:Select one:
a.
Management may establish appropriate controls but not enforce compliance with them.
b.
The controls may be operating effectively but may not be documented.
c.
The controls may be so inappropriate that no reliance is contemplated by the auditor.
d.
Management may implement controls whose costs exceed their benefits.
Which of the following is not a function or benefit of a
checklist?
Providing evidence of audit planning
Reducing workload for the auditee
Reducing risk of auditor bias
Maintaining the audit pace and continuity
Chapter 6 Solutions
Auditing: A Risk Based-Approach to Conducting a Quality Audit
Ch. 6 - Prob. 1TFQCh. 6 - Prob. 2TFQCh. 6 - Prob. 3TFQCh. 6 - Prob. 4TFQCh. 6 - Prob. 5TFQCh. 6 - Prob. 6TFQCh. 6 - Prob. 7TFQCh. 6 - Prob. 8TFQCh. 6 - Prob. 9TFQCh. 6 - Prob. 10TFQ
Ch. 6 - Prob. 11TFQCh. 6 - Prob. 12TFQCh. 6 - Prob. 13TFQCh. 6 - Prob. 14TFQCh. 6 - Prob. 15TFQCh. 6 - Prob. 16TFQCh. 6 - Prob. 17TFQCh. 6 - Prob. 18TFQCh. 6 - Prob. 19TFQCh. 6 - Prob. 20TFQCh. 6 - Prob. 21MCQCh. 6 - Prob. 22MCQCh. 6 - Prob. 23MCQCh. 6 - Prob. 24MCQCh. 6 - Prob. 25MCQCh. 6 - Prob. 26MCQCh. 6 - Prob. 27MCQCh. 6 - Prob. 28MCQCh. 6 - Prob. 29MCQCh. 6 - Prob. 30MCQCh. 6 - Prob. 31MCQCh. 6 - Prob. 32MCQCh. 6 - Prob. 33MCQCh. 6 - Prob. 34MCQCh. 6 - Prob. 35MCQCh. 6 - Prob. 36MCQCh. 6 - Prob. 37MCQCh. 6 - Prob. 38MCQCh. 6 - Prob. 39MCQCh. 6 - Prob. 40MCQCh. 6 - Prob. 41RSCQCh. 6 - Prob. 42RSCQCh. 6 - Prob. 43RSCQCh. 6 - Prob. 44RSCQCh. 6 - Refer to Exhibit 6.2 and describe the differences...Ch. 6 - Prob. 46RSCQCh. 6 - Prob. 48RSCQCh. 6 - Prob. 49RSCQCh. 6 - Prob. 50RSCQCh. 6 - Prob. 51RSCQCh. 6 - Prob. 52RSCQCh. 6 - Prob. 53RSCQCh. 6 - Indicate how the auditor could use substantive...Ch. 6 - Prob. 55RSCQCh. 6 - Prob. 56RSCQCh. 6 - Prob. 57RSCQCh. 6 - Prob. 58RSCQCh. 6 - Prob. 59RSCQCh. 6 - Prob. 60RSCQCh. 6 - Prob. 61RSCQCh. 6 - Prob. 62RSCQCh. 6 - Prob. 63RSCQCh. 6 - Prob. 64RSCQCh. 6 - Prob. 65RSCQCh. 6 - Prob. 66RSCQCh. 6 - Prob. 67RSCQCh. 6 - Prob. 68RSCQCh. 6 - Prob. 69FFCh. 6 - Prob. 70FFCh. 6 - Prob. 71FFCh. 6 - Prob. 72FFCh. 6 - MINISCRIBE (LO 1, 2) As reported in the Wall...
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Similar questions
- You are the audit manager for a new audit client. Your staff auditors are unsure of what constitutes a control deficiency. Discuss the terms control deficiency, design deficiency, and operating deficiency.arrow_forwardIf the auditor is unable to rely on the IT general controls or application controls of a client, they will assess audit risk as high. control risk as low. O inherent risk as high. O control risk as high.arrow_forwardIn most audits of large entities, control risk assessment contributes to audit efficiency, whichmeans thata. The cost of substantive procedures will exceed the cost of control evaluation work.b. Auditors will be able to reduce the cost of substantive procedures by an amount morethan the control evaluation costs.c. The cost of control evaluation work will exceed the cost of substantive procedures.d. Auditors will be able to reduce the cost of substantive procedures by an amount less thanthe cost of tests of controlsarrow_forward
- Are internal controls required even if an auditor doesn't plan to rely on them in his audit? Explain.arrow_forwardWhen evaluating whether accounting estimates made by management are reasonable, the audit team would be most interested in which of the following?a. Key factors that are consistent with prior periods.b. Assumptions that are similar to industry guidelines.c. Measurements that are objective and not susceptible to bias.d. Evidence of a conservative systematic bias.arrow_forwardThe auditor faces a risk that the audit will not detect material misstatements that occur in the accounting process. To minimize this risk, the auditor relies primarily on 1. substantive tests. 2. tests of controls. 3. internal control. 4. statistical analysis.arrow_forward
- Which of the following is appropriate about risk assessment? A. The assessed level of inherent and control risk can be sufficiently low, thus resulting to eliminating the need for substantive tests. B. Audit risk may be more effectively determined by assessing inherent and control risk separately. C. Detection risk is eliminated if an auditor were to examine 100 percent off the account balance or class of transactions. D. There is an iverse relationship between detection risk and the combined level of inherent and control riskarrow_forwardStudy and Evaluation of Management Control. The study and evaluation of management risk mitigation control is not easy. First, auditors must determine the risks and the controls subject to audit. Then they must find a standard by which performance of the control can be evaluated. Next they must specify procedures to obtain the evidence on which an evaluationcan be based. Insofar as possible, the standards and related evidence must be quantified. The following description gives certain information (in italics) that internal auditors would know about or be able to determine on their own. Fulfilling the requirement thus amounts to taking some information from the scenario and figuring out other things by using accountants’ and auditors’ common sense.The ScenarioAce Corporation ships building materials to more than a thousand wholesale and retail customers in a five-state region. The company’s normal credit terms are net/30 days, and no cash discounts are offered. Fred Clark is the chief…arrow_forwardThe primary difference between operational auditing and financial auditing is that in operational auditinga. The operational auditor is not concerned with whether the audited activity is generating information in compliance with financial accounting standards.b. The operational auditor is seeking to help management use resources in the most effective manner possible.c. The operational auditor starts with the financial statements of an activity being audited and works backward to the basic processes involved in producing them.d. The operational auditor can use analytical skills and tools that are not necessary in financial auditing.arrow_forward
- Why is the audit team more concerned with controlling the exposure to the risk of overreliancethan with the risk of underreliance?a. Only the risk of overreliance results in an incorrect audit decision.b. The risk of underreliance is not related to the audit team’s study and evaluation of internalcontrol.c. The risk of overreliance can ultimately result in the audit team’s failing to reduce auditrisk to acceptable levels.d. The risk of underreliance can be controlled by performing tests of controls during theinterim period.arrow_forwardIf the auditor uses the primarily substantive apporach instead of the lower control risk approach A. A higher level of understanding of internal control is required. B. The auditor plans to assess control risk at a lower level. C. The auditor plans a heavier reliance on substantive tests. D. The auditor plans to restrict substantive tests.arrow_forwardThe risk that material errors will not be detected is directly controllable by the auditor through substantive tests of details and other substantive audit procedures. IS THE STATEMENT TRUE OR FALSE? WHY?arrow_forward
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