tement 1: An entity wherein the client has a nominal interest, is considered a related. Statement 2: lf the auditor performed analytical procedures in the audit completion phase and discovers a previously unrecognized risk, the auditor shall issue an adverse opinion. Statement 3: One of the management's responsibilities regarding related party transactions is to properly account for and disclose such transactions. A. Only one statement is correct B. Only two statements are correct C. All statements are correct D. All statements are incorrect

tement 1: An entity wherein the client has a nominal interest, is considered a related. Statement 2: lf the auditor performed analytical procedures in the audit completion phase and discovers a previously unrecognized risk, the auditor shall issue an adverse opinion. Statement 3: One of the management's responsibilities regarding related party transactions is to properly account for and disclose such transactions. A. Only one statement is correct B. Only two statements are correct C. All statements are correct D. All statements are incorrect

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:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter6: A Framework For Audit Evidence

Section: Chapter Questions

Problem 35MCQ

See similar textbooks

Similar questions

It refers to the risks that a material misstatement will even occur, that it would not be prevented ordetected by client internal controls, and that is not detected by the auditor’s own procedures.a. Inherent riskb. Control riskc. Detection riskd. Audit risk Audit risk and materiality are considered at the level ofa. Overall financial statements.b. Assertions relating to individual account balance, class of transactions, or disclosure.c. Both a and b.d. Neither a nor b.
True or False 1. The main source of the auditor's understanding about the status of cases and litigations faced by the entity is the entity's legal counsel 2. Control activities may be applied on either manual system, computerized system, or combination of both 3. Studying the relationship of financial information with another information, whether financial or non-financial, is an example of an analytical procedure 4. To reduce audit risk to an acceptable low level, the auditor should determine overall responses to assessed risks at the assertion level 5. It is necessary for the audit team members to have a collective knowledge needed to carry out the engagement 6. An important responsibility of an auditor is the establishment and maintenance of internal control on an ongoing basis 7. Generally, the more reliable internal controls are, the lesser the substantive test procedures the auditor would need to perform in auditing year-end account balances 8. The industry in which the client…
8. The essence of the audit function is to: Select one:a. Examine individual transactions so that the auditor may certify as to their validityb. Detect fraudc. Determine whether the client’s financial statements are fairly stated.d. Assure the consistent application of correct accounting procedures.
At the completion of the audit, management is asked to make a written statement that it is not aware of any undisclosed contingent liabilities. This statement would appear in the: a. Engagement letter. b. Management letter. c. Management representation letter. d. Legal representation letter.
STATEMENT 1: Audit documentation provide the principal support for the auditor's opinion on the fairness of the financial statements. STATEMENT 2: Audit documentation aid in planning and conducting for future audits. A. Only Statement 1 is incorrect B. Only Statement 1 is correct C. Both statements are incorrect D. Both statements are correct
STATEMENT 1: Audit working papers are the documents accumulated by the auditor showing the procedures performed, audit testing applied, information obtained, and conclusions reached. STATEMENT 2: Audit working papers aid the auditor in the conduct and supervision of the audit engagement. A. Only Statement 1 is incorrect B. Only Statement 1 is correct C. Both statements are incorrect D. Both statements are correct
19. An auditor conducting an audit in accordance with ______________is responsible for obtaining reasonable assurance that the financial statements taken as a whole are free from material misstatement, whether caused by fraud or error. a. ISAs b. None of the options c. IFRS d. IAS
5. Which of the following is not a primary purpose of audit documentation? * A. To assist in the formulation of audit conclusion B. To facilitate the review of the audit procedures done by the audit team C. To coordinate the conduct of the audit D. To prepare evidence in the event of a suit against the client E. None of them
TRUE OR FALSE? Management assertions are provided to the auditor in the assertions letter, but are not disclosed on the financial statements.
2. An auditor is required to obtain sufficient understanding of each component of an entity’s internal control system to plan the audit of the entity’s financial statements and to assess control risk for the associated assertions in the account balance, transaction class, and disclosure components of the financial statements. a. Define Internal Control b. For what purpose should an auditor’s understanding of the internal control components be used in planning an audit? c. What are an auditor’s documentation requirements concerning an entity’s internal control system and the assessed level of control risk
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.
When control risk is assessed at less than high for all financial statements assertions, an auditor should document the auditor’s A B C D · Understanding of the entity’s internal control structure Yes Yes No Yes · Conclusion that control risk is less than high No Yes Yes Yes · Basis for the conclusion that control risk is less than high Yes Yes No No a. D b. B c. C d. A