Risk of material misstatements increases if

Q: Explain contributory negligence.

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

Q: What determines the acceptable level of Detection Risk?

A: Detection Risk:   It is a chance that an auditor will fail to identify any material misstatement…

Q: Explain the difference between unique risk and systematic risk

A: Answer

Q: What items could increase the risk of material misstatement?

A: Risk of material misstatement (ROMM) is a risk that the financial statements when audited will…

Q: ctiveness of te e risk of incorred

A: The right answer is option b .The risk of rejection

Q: What disclosures are required for remote likelihood of losses?

A: Likelihood of losses means chance of occuring loss in some future events of the business. Likelihood…

Q: “Costs of abnormal spoilage are losses.”Explain.

A: Abnormal spoilage is spoilage that is not inherent in a specific production process and will not…

Q: How can a poorly designed database result in unintentional loss of critical records?

A:

Q: Describe Detection Risk.

A: Risk: It is the uncertainty about the future events of the company. The adverse chances of choosing…

Q: What is the risk of assessing Control Risk too low?

A: Definition:   Tests of controls: Tests of controls form the part of audit procedures to be…

Q: What happens when Control Risk is below the maximum level?

A:

Q: What is Normal spoilage?

A: Definition:   Spoilage: Spoilage is the defective item at intermediate or final stage. The spoilage…

Q: Discuss the risks from equipment failure and how they can be controlled.

A: Under data communication, equipment failure can be defined as the special device or equipment that…

Q: Distinguish between counterbalancing and noncounterbalancing errors. Give an example of each.

A: Difference:Counterbalancing errors are the type of errors that cancels out or equalize other error…

Q: Discuss about systematic and unsystematic risk.

A: Risk refers to the movement or fluctuation in the value of an investment. The movement can be…

Q: “Total input includes abnormal as well as normal spoilage and is, therefore, inappropriate as a…

A: Inventory shrinkage: It represents the loss of inventory. In other words, it refers to the…

Q: Disruptions to operations are a common side effect of implementing an ERP. Explain the primary…

A: ERP: Enterprise resource planning is management software that helps in integrating all the…

Q: An inaccurate estimate of asset needs can have serious consequences. Explain how?

A: Estimates of assets:  Estimate of assets is the estimated worth of assets of original worth of…

Q: What is required if a Material Weakness is identified?

A:

Q: Distinguish between: Systematic risk and Unsystematic risk

A: The risks faced by the company arises from both micro as well as macro levels. The risk arising out…

Q: According to our authors, what is a misstatement? Provide examples.

A: Misstatement: A remark that is not accurate or the provision of erroneous information is referred to…

Q: If detective controls signal error flags, why shouldn’t these types of controls automatically make a…

A:

Q: Distinguish between counterbalancing and non-counterbalancing errors. Give an example of each.

A: Distinguish between counterbalancing and non-counterbalancing errors. Give an example of each.…

Q: What is the Allowable Risk of Over-reliance?

A: Auditor has to test the account balances and classes of transactions and has to do both control…

Q: Identify the weakness and the risk relating to the above.

A: Answer: The weakness is the shortcoming in any process and risk is the factor that result due to…

Q: Which is an error of omission

A: Accounting error is error in entering, computing, and analysis of data. This includes the recording…

Q: How can spooling present an added exposure?

A:

Q: Operational risks may result from breakdowns in ______ procedures, people and systems as opposed to…

A: Operational risks Operational risks are referred to as that risk that includes errors because of the…

Q: If detective controls signal error flags, why shouldn’t this type of controls automatically make a…

A: Definition:   Internal control: Internal control involves the norms and rules which are followed…

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: The risk of damages in the life of a machine component can be eliminated by using collective…

A: Collective measures are called collective because they protect more than one person. They protect a…

Q: What is the condition of security? Has it been reasonably well maintained or does it show the…

A: Security is a financial instrument, either equity or debt, which has some legal values. Securities…

Q: Define the term spoilage.

A: Definition:   Product costs: The costs incurred to acquire the merchandise, ship the stock, prepare…

Q: New technologies are used. This is an example of: * O Audit risk O Control risk Inherent risk…

A: Audit Risk: Audit risk is the risk that financial statements are materially misstated and the…

Q: Describe the steps to be taken to correct an error.

A: Accounting Error:   It is an unintentional mistake in recording an accounting entry and is…

Q: Explain Prepayment Penalties?

A: Prepayment penalties are those penalties that lender charges from the borrower if borrower…

Q: What is the risk of assessing Control Risk too high?

A: Control risk refers to the probability of financial statements that were considered wrongly stated…

Q: Distinguish between diversifiable and non-diversifiable risk

A:

Q: risk of material misstatemen-

A: Risk of material misstatement is the vulnerability of financial statements to errors or frauds that…

Q: “Units of abnormal spoilage are inferred rather than identified.”Explain.

A: Spoilage:Spoilage is the defective item at intermediate or final stage. The spoilage goods cannot be…

Q: Define risk of material misstatement.

A: Material misstatement represents the statement presented in the financial statement which is…