Auditing & Assurance Services: A Systematic Approach (Irwin Accounting)
10th Edition
ISBN: 9780077732509
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 6.9RQ
To determine
Concept Introduction:
Control risk is a function of the effectiveness of design, implementation and maintenance of internal control by management. Internal control can reduce the risk but cannot eliminate the risk of material misstatement. For example: There is a possibility of human errors.
To discuss: The requirements for documenting the assessed level of risk
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Chapter 6 Solutions
Auditing & Assurance Services: A Systematic Approach (Irwin Accounting)
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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- 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_forwardAfter 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 GAASarrow_forwardABOUT AUDITING The process of selecting and developing policies and procedures to help mitigate risks to an acceptable level is part of which component in the COSO Framework? a. Control environment b. Risk assessment c. Control activities d. Monitoringarrow_forward
- Aside from documenting his/her understanding of the internal control structure, the auditor should also document the assessed level of control risk. True or false? why?arrow_forwardWhat are the benefits of the internal audit function establishing a risk-based plan when identifying the priorities of the internal audit activity?arrow_forwardWhat are the components of Audit Risk? Use the Audit risk equation and briefly explain the components of audit risk.arrow_forward
- How is the directional risk of inventories applied in determining the appropriate audit procedures to be performed?arrow_forwardWhat is audit risk? Briefly explain how the concepts of audit risk and materiality are related.arrow_forwardWhat responses should an auditor take based on different levels of acceptable detection risk (DR)? What type of tests should be performed?arrow_forward
- Discuss the auditor's risk assessment procedures for assessing control risk, and provide specific procedures related to understanding management's risk assessment component of internal control.arrow_forwardDefine the audit risk model and explain each term in the model.Also describe which two factors of the model when combined reflect the risk of materialmisstatements.arrow_forwardThe documentation of the audit strategy is a record of the planned nature, timing and extent of riskassessment procedures and further audit procedures at the assertion level in response to theassessed risks True or False?arrow_forward
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