What are the components of the risk of material misstatement (RMM)? What are the components of the audit risk model?

Q: The risk of incorrect rejection and the risk of underreliance relate to thea. Effectiveness of the…

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Q: Which analytical procedures are most important in verifyingnotes payable? Which types of…

A: Definition: Liabilities: The claims creditors have over assets or resources of a company are…

Q: Which of the following does NOT accurately describe detection risk? assessed as low when control…

A: The risk that the financial statements of an entity include material misstatements is referred to as…

Q: If performance materiality increases, what impact would it have on the amount of evidence required…

A: Auditing is an important activity undertaken by almost every organization. It helps increase the…

Q: Substantive analytical procedures are performed by auditor: To identify and assess detection risk To…

A: Auditor is the person who is responsible for performing audit work. Audit means checking and…

Q: The documentation of the audit strategy is a record of the planned nature, timing and extent of risk…

A: The answer for the True or false question and relevant explanation are presented hereunder : What is…

Q: Describe the methodology fordesigning tests of details ofbalances using the audit riskmodel.

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Q: Which of the following statements is correct regarding detection risk and the audit risk model? OA.…

A: Audit risk is a tool for auditor to evaluate various risks may arise while performing an audit.…

Q: Why is the audit team more concerned with the risk of overreliance than with the risk of…

A: Auditing is a gathering of information and evaluation of evidence as to report on the degree of…

Q: Determine the assessed levels of detection risk and inherent risk

A: Audit is defined as an investigation of some statements of figure involving examination of certain…

Q: What responses should an auditor take based on different levels of acceptable detection risk (DR)?…

A: There are different ways an auditor responds to fraud risks that are assessed and it depends upon…

Q: Which of the following risks does the auditor least control? a. inherent risk b. control risk c.…

A: Definition: Auditing: Auditing is a process wherein the auditor investigates the financial…

Q: What is lapping? What procedures can auditors employ to detect lapping?

A: Lapping: It refers to a type of accounting fraud that involves the hiding of misappropriated or…

Q: Define the audit risk model and explain each term in the model.Also describe which two factors of…

A: As follows, the audit risk model:

Q: The higher the risk of material misstatements the lower should audit risk be taken. True or false

A: Audit risk is the risk that an auditor expresses an inappropriate opinion.  This is the risk that…

Q: The risk of a material misstatement in the financial statements arising due to error or omission as…

A: Error or Omission is an unintentional mistake which leads to risk of material misstatement in the…

Q: The risk that audit evidence for a segment will fail to detect misstatements exceeding tolerable…

A: Audit evidence refers to all sorts of information, or bunch of documents or any sort of data…

Q: Explain

A: Audit is the process of examining and analyzing the financial documents relating to the company’s…

Q: How can an auditor reduce a client’s inherent risk?

A: Inherent risk is the risk of material misstatement assuming there are no related controls. Inherent…

Q: What are the risks if the auditor concludes controls are operating effectively based on the sample…

A: Definition:   Sampling risk: Sampling risk is a risk that arises when the judgments based on the…

Q: true when the auditor determines the client has a low risk of material

A: First option is wrong because risk of material misstatements is judged not only based on the…

Q: What is the upper limit on misstatements? What information does it provide the auditor?

A: A Misstatement is a statement having concealed facts or misleading information regarding the facts,…

Q: It's important to explain what lapping is and how an auditor may find it. When should the auditor…

A: This question explains about what lapping is and how an auditor may find it.

Q: Define control risk and explain the role of control risk assessment in audit planning.

A: Three types of risks in auditing: Inherent Risk Control Risk Detection Risk Control Risk: It is…

Q: What are the objectives of audit risk assessment, and why is it important in assessing the…

A: Given: The objectives of audit risk assessments and the importance of its assessment.

Q: The combination of inherent risk and control risk refers to: Detection risk Audit risk Risk of…

A: The answer for above question is given below:

Q: Explain the circumstances when the auditor should revise the components of the audit risk model and…

A: The auditor should revise the parts of the audit risk model once the proof collected throughout the…

Q: How is the directional risk of inventories applied in determining the appropriate audit procedures…

A: Answer: During the audit of any balance sheet items, proper audit procedures are to be gathered to…

Q: How are the sufficiency and appropriateness of evidence related to detection risk?

A: Audit Evidence:   The pieces of evidence provided by the audit team to prove their opinion with…

Q: What should the audit team consider in its planning discussionabout fraud risks?

A: Fraud risk is the intentional misstatement in the financial statements by the management for the…

Q: In assessing control risk, an auditor selects from a variety of techniques, including A. Inquiry and…

A: Introduction: Auditing means a systematic examination of books to verify the authenticity and…

Q: What are the components of Audit Risk? Use the Audit risk equation and briefly explain the…

A: Audit risk means the risk that the auditor gives an inappropriate audit opinion  when the financial…

Q: What is the relationship between Evidence and Detection Risk?

A: Detection risk is the risk that an auditor will not find a material misstatement in a client's…

Q: Ordinarily, it would be appropriate to design audit procedures that would be expected to detect…

A:

Q: What is the difference between document examination and reperformance when conducting tests of…

A: Test of controls are performed to obtain evidence about whether controls that are candidates to be…

Q: WHAT ARE THE SIGNIFICANT RISK YOU SHOULD CONSIDER UPON AUDITING CURRENT LIABILITIES AND HOW WOULD IT…

A: Current liabilities refers to the liabilities which will be  due and payable by the organisation…

Q: The more the auditor relies on the operating effectiveness of controls in the assessment of risk,…

A: AS per the Auditing Standard "The Auditor's Responses to the Risks of Material Misstatement", Some…

Q: What is the maximum number of inaccuracies? What does the auditor get out of it?

A: Introduction: A misstatement is a statement that contains hidden truths or false information about…

Q: How do you assess the risk of material misstatement associated with the audit of inventories?

A: Answer: When auditor performs the audit procedures, there is always the risk of misstatement and…

Q: What is check kiting? How might auditors detect kiting?

A: Auditing refers to the process of scrutinizing the financial statement of the business entity and…