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 6, Problem 6.18MCQ
To determine
Concept Introduction:
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.
Audit risk has its three components; inherent risk, control risk, and detection risk.
To choose: The action that is not involved while assessing the control risk below high.
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Students have asked these similar questions
The assessment of control risk can be made at any of the following times except:
A. After some tests of controls are performed concurrently with obtaining an understanding.
B. After performing all the necessary substantive tests.
C. After the performance of additional tests of controls designed to further lower the assessment of control risk.
D. Immediately after obtaining an understanding of internal control.
In assessing control risk, an auditor selects from a variety of techniques, including
A. Inquiry and recalculation
B. Reperformance and observation
C. Comparison and confirmation
D. Inspection and verification
After obtaining a sufficient understanding of internal control, the auditor:
a. Determines the preliminary assessment of control risk
b. Determine the assessed levels of detection risk and inherent risk
c. Assess detection risk to determine the acceptable level of inherent risk
d. Assess the need to apply GAAS
Chapter 6 Solutions
Loose-leaf For Auditing & Assurance Services: A Systematic Approach
Ch. 6 - Prob. 6.1RQCh. 6 - Prob. 6.2RQCh. 6 - Prob. 6.3RQCh. 6 - Prob. 6.4RQCh. 6 - Prob. 6.5RQCh. 6 - Prob. 6.6RQCh. 6 - Prob. 6.7RQCh. 6 - Prob. 6.8RQCh. 6 - Prob. 6.9RQCh. 6 - Prob. 6.10RQ
Ch. 6 - Prob. 6.11RQCh. 6 - Prob. 6.12MCQCh. 6 - Prob. 6.13MCQCh. 6 - Prob. 6.14MCQCh. 6 - Prob. 6.15MCQCh. 6 - Prob. 6.16MCQCh. 6 - Prob. 6.17MCQCh. 6 - Prob. 6.18MCQCh. 6 - Prob. 6.19MCQCh. 6 - Prob. 6.20MCQCh. 6 - Prob. 6.21MCQCh. 6 - Prob. 6.22MCQCh. 6 - Prob. 6.23MCQCh. 6 - Prob. 6.24MCQCh. 6 - Prob. 6.25PCh. 6 - Prob. 6.26PCh. 6 - Prob. 6.27PCh. 6 - Prob. 6.28PCh. 6 - Prob. 6.29PCh. 6 - Prob. 6.30PCh. 6 - Prob. 6.31P
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Similar questions
- When the auditor has assessed control risk of a particular area at a reduced level, he or she will then Select one: a. eliminate the need to gather evidence in that area. b. test the effectiveness of the controls in that area. c. proceed to expand the sample sizes in that area. d. negotiate with management to determine which controls will be tested in that area.arrow_forwardWhich of the following statements best describes the phrase, “evaluating the design of a control”? Group of answer choices A. Considering whether the control, individually or in combination with other controls, is capable of effectively preventing, or detecting and correcting, material misstatements. B. Expressing an opinion as to the effectiveness of a control. C. Observing the application of specific controls. D. Determining whether the control exists and that the entity is using it.arrow_forwardIf control risk is assessed at the maximum, the auditor is required to obtain knowledge about the: Design of Control Policies and Procedures Yes O No OYes O No Whether Control Policies and Procedures Have been Implemented No Yes Yes Noarrow_forward
- Auditing standards indicate that if the preliminary control risk assessment is low, the auditor then gains assurance that the controls are operating effectively. What is meant by testing the operating effectiveness of controls? How does an auditor decide which controls to test?arrow_forwardDescribe how the nature of evidence used to evaluate the control environment differs from the nature of evidence used to evaluate control actives.arrow_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_forward
- Must the overall understanding of internal control always be followed by assessment and testingphases? Explain.arrow_forwardDefine control risk and explain the role of control risk assessment in audit planning.arrow_forwardWhen an audior increases the assessed level of control risk because certain control activities were determined to be ineffective, the auditor would most likely increase the: A. extent of tests of control B. level of detection risk C. extent of tests of detail D. Level of inherent riskarrow_forward
- Which of the following is not a common procedure for assessing operating effectiveness of preventive controls? a. Observation of personnel b. Analysis of trends or ratios c. Inspection of documents d. Inquiries of managementarrow_forwardWhen is the timing of substantive procedures most flexible? detection risk is assessed as low O there is a lack of an effective control environment O controls have been tested and are determined to be ineffective O controls have been tested and are determined to be effectivearrow_forwardPlace the auditor's activities to assess control risk in the proper order: Group of answer choices Walkthrough, flowchart, tests of controls Flowchart, significant deficiency, audit committee Flowchart, walkthrough, tests of controls Walkthrough, narrative, tests of controlsarrow_forward
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