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 7, Problem 22MCQ
To determine
Introduction:
Control risk are the risks that there is a probability of material misstatement of financial statement due to failures of internal controls in a business. Due to control failures, a business has more risks to experience unaccounted losses. It means there is a misstatement of financial statements wherein these reflect a profit when actually there was a loss.
To choose:The option which is true regarding control risk
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Students have asked these similar questions
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 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.
A related party transaction is a transfer of resources, services, or obligations between related parties when no consideration is involved.
The auditor assesses control risk as high or at the maximum level when the internal controls of the client have not been effectively designed or have not operated effectively.
Group of answer choices
False, False
True, False
True, True
False, True
Chapter 7 Solutions
Auditing: A Risk Based-Approach to Conducting a Quality Audit
Ch. 7 - Prob. 1TFQCh. 7 - Prob. 2TFQCh. 7 - Prob. 3TFQCh. 7 - Prob. 4TFQCh. 7 - Prob. 5TFQCh. 7 - Prob. 6TFQCh. 7 - Prob. 7TFQCh. 7 - Prob. 8TFQCh. 7 - Prob. 9TFQCh. 7 - Prob. 10TFQ
Ch. 7 - Prob. 11TFQCh. 7 - Prob. 12TFQCh. 7 - Prob. 13TFQCh. 7 - In terms of the timing of the risk response, the...Ch. 7 - Prob. 15MCQCh. 7 - Prob. 16MCQCh. 7 - Prob. 17MCQCh. 7 - Prob. 18MCQCh. 7 - Prob. 19MCQCh. 7 - Prob. 20MCQCh. 7 - Prob. 21MCQCh. 7 - Prob. 22MCQCh. 7 - Prob. 23MCQCh. 7 - Prob. 24MCQCh. 7 - Prob. 25MCQCh. 7 - Prob. 26MCQCh. 7 - Prob. 27MCQCh. 7 - Prob. 28MCQCh. 7 - Prob. 29RSCQCh. 7 - Prob. 30RSCQCh. 7 - Define the following terms: (a) performance...Ch. 7 - Prob. 32RSCQCh. 7 - Prob. 34RSCQCh. 7 - Prob. 35RSCQCh. 7 - Prob. 36RSCQCh. 7 - How does inherent risk relate to internal...Ch. 7 - Prob. 38RSCQCh. 7 - Prob. 39RSCQCh. 7 - Prob. 40RSCQCh. 7 - Prob. 43RSCQCh. 7 - Prob. 45RSCQCh. 7 - Prob. 46RSCQCh. 7 - Prob. 47RSCQCh. 7 - Prob. 48RSCQCh. 7 - Prob. 49RSCQCh. 7 - Prob. 52RSCQCh. 7 - Prob. 53RSCQCh. 7 - Prob. 54RSCQCh. 7 - Prob. 55RSCQCh. 7 - Prob. 56RSCQCh. 7 - Prob. 57RSCQCh. 7 - Prob. 58FF
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Similar questions
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- 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.arrow_forwardWhich of the following are indicators of a high-risk or low-risk profile client? Explain? Poor recent or forecast performance Significant control weaknesses Well-financed Conservative, prudent accounting policies Competent, honest management Significant unexplained transactions or transactions with connected companies Why do you think that inherent and control risk is responsible for the audited company(client) and detection risk belongs to auditors?arrow_forwardWhich of the following does not accurately summarize auditors’ requirements regarding internal control?arrow_forward
- Which of the following activities should the internal audit function NOT be involved in?a. Monitoring of management's performanceb. Reviewing adequacy of management information for decision-making purposesc. Taking responsibility for the implementation of a new sales ledger systemd. Assessing compliance with regulation Internal auditors may not perform:a. Audits of financial statements resulting in reports intended for management’s use only.b. Integrated audits leading to an audit opinion issued in accordance with PCAOB standards.c. Forensic audits.d. All of the above. An “integrated audit”, as required by Sarbanes-Oxley Act for U.S. public companies,includes an audit ofa. The company’s internal controlsb. The company’s financial statementsc. The company’s compliance with its rules and policiesd. Both A and B The auditor’s opinions on the effectiveness of internal control over financial reporting (ICFR) in anintegrated audit in accordance with PCAOB AS include the following types…arrow_forwardWhich one of the following is not an objective of a system of internal controls? Select one: 1. Overstate liabilities in order to be conservative 2. Enhance the accuracy and reliability of accounting records 3. Safeguard company assets 4. Reduce the risks of errorsarrow_forwardMaster accountingarrow_forward
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