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 32RSCQ
To determine
Introduction: It is about the qualitative aspects of material judgments by the auditor.
To describe: SEC is worried about the auditor’s skills to understand the qualitative aspects of material judgments. It is to be explained and to list out some factors pertaining to this.
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Students have asked these similar questions
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?
Why would an auditor use observation to gather evidence? What are the strengths and weaknesses of this type of test?
The SEC notes, with respect to materiality, that
Group of answer choices
Professional judgment should not be used in allocating the preliminary estimate to the accounts.
Quantitative considerations are more important than qualitative issues when considering misstatements.
Small misstatements, regardless of whether they are intentional or not, are considered immaterial.
Auditors should consider both the individual and the aggregate impact of misstatements in determining if they are material.
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
- Can the auditor obtain more audit evidence to compensate for the lack of perceived appropriateness (quality) of the evidence which is available?arrow_forwardWhich of the following is not the factor to be considered by an auditor while performing analytical procedures? O a. Develop expectation of recorded amounts or ratios and evaluate whether the expectation is sufficiently precise to identify misstatement O b. Evaluate reliability of data O c Determine suitability of overall audit strategy O d. Determine suitability of particular substantive analytical procedure for given assertionarrow_forwardWhich of the following statements is not correct? A) There are many ways an auditor can accumulate evidence to meet overall audit objectives. B) Sufficient appropriate evidence must be accumulated to meet the auditor's professional responsibility. C) It is appropriate to minimize the cost of accumulating evidence. D) Gathering evidence and minimizing costs are equally important considerations that affect the approach the auditor selects. E) All of the abovearrow_forward
- Auditors often use a client's historical experience and subsequent transactions to evaluate the reasonableness of estimates. Question options: True Falsearrow_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_forwardDefine risk of material misstatement. At what level of the financial statements do auditors measure RMM? Describe how auditors assess the RMM. What role does RMM play in substantive testing?arrow_forward
- Incorporating elements of unpredictability in the selection of audit procedures to be performed by auditors is important.Explain whyarrow_forwardA.“It is the auditors’responsibility to gather sufficient appropriate evidence to reachtheir opinion. Discuss the above statement by explaining the differences between the evidence’s sufficiency and appropriateness. Your answer should include a discussion of two types of audit evidence.arrow_forwardMUS's auditor assesses what is an acceptable misstatement.arrow_forward
- Which of the following statements is true? Select one: a. If evidence is subjective, it cannot be reliable b. Evidence must be relevant to all of the audit objectives c. Evidence obtained directly by the auditor may not be reliable if the auditor lacks the qualifications to evaluate the evidence. d. The persuasiveness of evidence can be evaluated after considering its sufficiencyarrow_forwardWhich of the following statements about materiality is considered true? a. Materiality is judged by the auditor using his professional knowledge and experience since materiality of an item varies with circumstances. b. Materiality could never influence the economic decisions of users taken on the basis of the financial information. c. The auditor should consider materiality but not its relationship with audit risk when conducting an audit. d. The size and nature of the item will not determine its materiality.arrow_forwardWhich of the following is true when the auditor determines the client has a low risk of material misstatement? O increased reliance on substantive tests of transactions and account balances O increased reliance on testing of controls O detection risk is assessed as low O inherent risk is assessed as higharrow_forward
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