Inherent risk is the susceptibility of an account balance, class of transactions or disclosure to material misstatement given inherent and environmental characteristics, but without regard to internal control. Required: Identify and discuss five (5) factors that af

Q: Which of the following audit procedures is least appropriate for addressing the assertion of…

A: Assertion of Valuation is one of the 7 assertions of Auditing. Under the assertion of valuation, it…

Q: Choose an alternative which is not the external source of audit evidence. a. Confirmation from…

A: External Evidence are audit evidences that originate outside the client’s organization. These…

Q: Ethical requirements relating to an audit of financial statements is specified under ISA 250 and it…

A: Auditing is the verification of the accounts of the entities to provide the opinion for the position…

Q: 3 types of misstatements

A: Misstatements are the under or over-statements of account balances or class of transactions…

Q: 13 ________ is related to the impact of adverse information about bank*         A. Operational risk…

A: Risks of banks:  Credit risk, market risk, and operational risk are the three main risks that banks…

Q: The objective of dual-purpose tests is to: A. Test internal controls as well as transactions and…

A:

Q: Assertions with high inherent risk are least likely to involve  a. complex calculations b.…

A: Routine transactions doesn't have assertions with high inherent risk.

Q: From the alternatives given below identify which one is not the objective of Internal Control…

A: Internal control: Internal control is the process which is implemented by the company to protect…

Q: For the following statements identify the assertion related to the risk of material misstatement.…

A: Assertion or audit assertions refers to the claim /representation made by the management which is…

Q: 4. a) The primary responsibility for the prevention and detection of fraud rests with both those…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: From the following statements, identify which error/s creates material misstatement while reporting…

A: Material misstatement is referred to as an information in financial statements, which are actually…

Q: S1: The risk of material misstatement of the financial statements is generally lesser when account…

A: It is required rather necessary for an auditor to obtain sufficient evidence and be independent…

Q: This is a process of evaluating the effectiveness of a client's internal controls in preventing or…

A: INTERNAL CONTROL IS A MECHANISM WHICH IS IMPLEMENTED TO ENSURE THE INTEGRITY OF FINANCIAL AND…

Q: T/F The AICPA's “audit risk model" applies to the relevant assertion-level of an individual audit…

A: The audit risk model is the foundation of any audit. It is a tool used by auditors to understand the…

Q: 8 Answer is not complete. a. Evaluating the effectiveness of the client's internal control in…

A: Risk Assessment: The  client’s internal  control  is evaluated to get the effectiveness of it. It is…

Q: In accordance with ISA 315, the auditor shall identify and assess the risks of material misstatement…

A: ISA 315 -IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING…

Q: S1. Operational risk, as opposed to efficiency, is the risk of loss resulting from inadequate…

A: Operational risk as opposed to efficiency, is defined as the risk of loss resulting from inadequate…

Q: One of the requirements of financial statements is that they should be free from material error.…

A: Financial statements are statements prepared at the end of the year to analyse and review…

Q: Once risks are identified, auditors assess the risk of material misstatement at the _______ level…

A: Solution: Once risks are identified, auditors assess the risk of material misstatement at the…

Q: Which control activity is the entity implementing when credit and debt memorandums are prenumbered…

A: Control activities helps in assuring that necessary actions are taken to address risks to the…

Q: From the alternatives given below identify which one is not the objective of Internal Control…

A: The basic role of internal control is to serve as an appraisal…

Q: 1. The audit risk is 3% while the inherent risk is 80% and control risk is 40%. What is the…

A: Audit risk seems to be the chance that the audit would contain human mistakes and so would not be…

Q: One of the purposes of internal control is to protect: Select one: a. assets. b. all statement of…

A:

Q: An auditor must identify the relevant assertions about each significant financial statement account…

A: a.

Q: A material weakness is a situation in whicha. It is probable that an immaterial financial statement…

A: Material weakness: Combination of deficiencies in internal control over financial reporting of the…

Q: Generally, audit evidence cannot be obtained entirely through substantive procedures   True or…

A: Substantive procedures are the method or audit tests designed by an auditor to evaluate the…

Q: which of the following regarding errors is correct Select one: a. it is easier for the auditor to…

A: Ans. Errors can be of two types - i. Intentional error ii. Unintentional error Intentional errors…

Q: If the auditors encounter a significant scope limitation in evaluating a public company's internal…

A: If the auditors encounter a significant scope limitation in evaluating a public company's internal…

Q: tch the type of risk with the related definition. A. Detection risk B. Control risk C. Inherent risk…

A: Solution:- 1. The probability that an auditor will give an inappropriate opinion on financial…

Q: 3. Which of the following is NOT part of the control activities applicable to Financial Statement…

A: Solution Concept Financial statement audit                 During the audit of the financial…

Q: Which of the following statements is true regarding assertions in the revenue cycle?     All five…

A: under normal audit risk conditions the occurrence assertion would be more relevant than the…

Q: The most important objective of risk assessment procedures performed by auditor is a. To identify…

A: As per ISA 315 IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENTS: The most important…

Q: our controls. (Present the answer in three columns, headed “Risk”, “Control” and

A: This commonplace establishes necessities concerning the method of characteristic and assessing risks…

Q: Which one of the following statements is most appropriate to Control risk? Susceptibility of account…

A: Auditing means the independent checking of company operation by outsider. Auditor is  qualified and…

Q: Which of the following would assist an entity in cat and prevent fraud? a. Accounting…

A: Fraud:- When one person intentionally conducts some activities which are against the rules and…

Q: he importance of internal control is to protect against all of the following EXCEPT     integrity…

A: Internal controls: Internal controls are the controls which are defined for the purpose of Auditing…

Q: The likelihood that material misstatements may have entered the accounting system and notbeen…

A:

Q: The probability that, in the absence of internal controls, material errors or frauds could enter the…

A: Inherent risk :       As the name suggests, it is the risk which is inherent in the omission or…

Q: 5. Which of the following statements is false regarding fraud risk factors related to long-lived…

A: Long lived asset are assets which have long useful life.

Q: d. When documenting their understanding of a client's internal controls, auditors are required to…

A: The books of accounts are required to be audited by the auditor so as to check whether the…

Q: Elaborate the difference between material effect of misstatement and pervasive effect of…

A: Misstatement occurs when the financial statements are not presented fairly in all material aspects,…

Q: An auditor conducting an audit in accordance with ______________is responsible for obtaining…

A: An auditor conducting an audit in accordance with ISAs is responsible for obtaining reasonable…

Q: Which one of the following is not an objective of a system of internal controls? Select one: 1.…

A: Internal controls are the mechanisms, rules, and procedures implemented by a company to ensure the…

Q: allowance for doubtful

A: Correct answer :- Right and Obligations.