AUDITING & ASSURANCE SERVICES CONNECT AC
10th Edition
ISBN: 9781259292057
Author: MESSIER
Publisher: MCG
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Chapter 7, Problem 7.24MCQ
To determine
Introduction:
Financial Reporting Risks means chances are there that auditor may fail to detect any error or fraud which might affect the decisions of potential stakeholders if known. It means that financial statements might be materially incorrect even thought audit report shows that financial statements are free from material misstatement.
Entity Level Controls are internal controls for understanding the risks of an organization and to make sure that information is complete, accurate and reliable and operations are carried out in an effective manner. Here entity refers to the company as a whole.
To describe: Financial Reporting risks and entity level controls and management’s reliance.
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Chapter 7 Solutions
AUDITING & ASSURANCE SERVICES CONNECT AC
Ch. 7 - Prob. 7.1RQCh. 7 - Prob. 7.2RQCh. 7 - Prob. 7.3RQCh. 7 - Prob. 7.4RQCh. 7 - Prob. 7.5RQCh. 7 - Prob. 7.6RQCh. 7 - Prob. 7.7RQCh. 7 - Prob. 7.8RQCh. 7 - Prob. 7.9RQCh. 7 - Prob. 7.10RQ
Ch. 7 - Prob. 7.11RQCh. 7 - Prob. 7.12RQCh. 7 - Prob. 7.13RQCh. 7 - Prob. 7.14RQCh. 7 - Prob. 7.15RQCh. 7 - Prob. 7.16RQCh. 7 - Prob. 7.17RQCh. 7 - Prob. 7.18RQCh. 7 - Prob. 7.19MCQCh. 7 - Prob. 7.20MCQCh. 7 - Prob. 7.21MCQCh. 7 - Prob. 7.22MCQCh. 7 - Prob. 7.23MCQCh. 7 - Prob. 7.24MCQCh. 7 - Prob. 7.25MCQCh. 7 - Prob. 7.26MCQCh. 7 - Prob. 7.27MCQCh. 7 - Prob. 7.28MCQCh. 7 - Prob. 7.29MCQCh. 7 - Prob. 7.30MCQCh. 7 - Prob. 7.31MCQCh. 7 - Prob. 7.32MCQCh. 7 - Prob. 7.33MCQCh. 7 - Prob. 7.34PCh. 7 - Prob. 7.35PCh. 7 - Prob. 7.36PCh. 7 - Prob. 7.37PCh. 7 - Prob. 7.38PCh. 7 - Prob. 7.39PCh. 7 - Prob. 7.40PCh. 7 - Prob. 7.41PCh. 7 - Prob. 7.42PCh. 7 - Prob. 7.43PCh. 7 - Prob. 7.44PCh. 7 - Prob. 7.45P
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- Following is a list of internal controls. Select the COSO component that best matches each internal control. Internal control a. Implementation of policies to reduce risk of internal control failure. b. Reporting of internal control effectiveness to investors. c. Evaluation of internal control effectiveness by external auditors. d. Identification and management of risks. COSO Control activities Information & communication Monitoring Risk assessment Control environment Assessmarrow_forwardFor risk enabled and risk managed organizations, the conclusion on risk maturity is the first step in being able to provide assurance on risk management processes, management of key risks and reporting of risks. If Panda Company used the RBIA, then: a. The actions that are being taken to add, delete or modify existing responses where they do not currently bring risk within the risk appetite b. Agree all the risk management responses and risk management processes on which objective assurance from internal audit is required c. Produce an audit plan which lists all audits to be carried out over a specified period - usually a year. d. The internal audit activity's assurance strategy is therefore to provide assurance on these areas.arrow_forwardWhich of the following is driving the need for assurance maps?a. Risk managers.Incorrect. b. Board members. c. Internal auditors. d. Compliance practitioners.arrow_forward
- What are analytical procedures? Substantive tests designed to assess control risk Substantive tests designed to evaluate the validity of management’s representation letter Substantive tests designed to study relationships between financial and non-financial data All of the abovearrow_forwardAside 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_forwardEntity-level controls can have a pervasive effect on the entity's ability to meet the control criteria. Which one of the following is not an entity-level control? A. The period-end financial reporting process B. Controls to monitor results of the operations C. Controls to monitor the inventory taking process D. Management's risk assessment processarrow_forward
- Study 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_forwardCompany management completes event identification and assesses the severity of risk. Management then acts to alter the severity of risk. According to COSO’s ERM framework, the risk remaining after management’s actions is A. Inherent risk. B. Actual residual risk. C. Event risk. D. Target residual risk.arrow_forwardWhich of the following is not a principle relating to risk assessment? a. Identifies and analyses risks and respond to changes b. Designing the information systems c. Specifies objectives with sufficient clarity d. Considers the potential for fraud in assessing risksarrow_forward
- An assurance service is defined as a service thata. Provides auditing services to nonfinancial information.b. Reviews unaudited financial information.c. Improves the quality of information for decision makers.d. Reduces the risk in management decision making.arrow_forwardWhich of the following does not accurately summarize auditors’ requirements regarding internal control?arrow_forwardHow 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_forward
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