Requirements for the consideration of internal control.ĭ. An auditor is most likely to refer to one or more of the three general auditing standards inĬ. ![]() What is the magnitude of audit risk if inherent risk is. The risk that the auditor fails to modify materially misstated financial statements. The risk that error could occur and not be detected by the auditor's procedures.ĭ. The risk that error could occur and not be prevented or detected by the internal control structure.Ĭ. The susceptibility of an account balance to error that could be material.ī. In a financial statement audit, inherent risk representsĪ. The auditor is not retained to conduct a financial statement audit in the succeeding year. Inherent and control risk cause errors that could be material to the financial statements.ĭ. The auditor unknowingly fails to modify an opinion on materially misstated financial statements.Ĭ. Internal control fails and the failure is not detected by the auditor's procedures.ī. In a financial statement audit, audit risk represents the probability thatĪ. Audit review staff of the Securities and Exchange Commission.ĭ. who are not associated with the particular audit beingī. Peer review will most likely be performed byĪ. Williams & Co., a large international public accounting firm, is due to have a peer review. Which of the following is not an element of quality control?ĭ. Assigning personnel to audit engagements.ĭ. The least important evidence of a public accounting firm's evaluation of its system of qualityĬontrols would concern the firm's policies and procedures with respect toĬ. Ensure adequate informative disclosures in the financial statements. Prevent users of financial statements from misinterpreting the degree of responsibility assumedĭ. Inform users that the financial statements and related notes are the joint responsibility of theĬ. Prohibit the auditor from issuing a report that does not include an opinion on the financialī. An objective of the fourth generally accepted standard of reporting, relating to the expression ofĪ. Conformity of financial statements with GAAP. Consistent application of accounting principles.ĭ. ![]() Consideration of an entity's internal control structure.ī. The generally accepted standards of reporting encompass all of the following exceptĪ. Materiality is a matter of professional judgment. Materiality depends on the nature of an item rather than on the dollar amount.ĭ. Materiality depends only on the dollar amount involved.Ĭ. ![]() Materiality is determined by reference to AICPA guidelines.ī. Which of the following statements is correct concerning the concept of materiality?Ī. The need to maintain independence in mental attitude. Criteria for the content of the auditor's report on financial statements.Ĭ. The competence, independence, and professional care of persons performing the audit.ī. The generally accepted standards of fieldwork relate toĪ.
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