If the lower assessed level of control risk approach preliminary audit strategy is used, planned detection risk will be:
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If the lower assessed level of control risk approach preliminary audit strategy is used, planned detection risk will be:
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If the lower assessed level of control risk approach preliminary audit strategy is used, planned detection risk will be:
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1. If the predominantly substantive approach preliminary audit strategy is used, planned detection risk will be:
moderate or high.
at the higher level.
high or very high.
low or very low.
The correct option is .
Feedback: Section 12.2 Determining detection risk
2. If the lower...
if the lower assessed level of control risk approach preliminary audit strategy is used
planned detection risk will be
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If the lower assessed level of control risk approach preliminary audit strategy is used, planned detection risk will be:
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Chapter 12
Designing Substantive Procedures
1. If the predominantly substantive approach preliminary audit strategy is used, planned
detection risk will be:
a. moderate or high.
b. at the higher level.
c. high or very high.
d. low or very low.
The correct option is d.
Feedback: Section 12.2 Determining detection risk
2. If the lower assessed level of control risk approach preliminary audit strategy is used,
planned detection risk will be:
a. at the lower level.
b. moderate or high.
c. at the higher level.
d. high or very high.
The correct option is b.
Feedback: Section 12.2 Determining detection risk
3. If the predominantly substantive approach preliminary audit strategy is used, the
planned level of substantive procedures will be:
a. at the lower level.
b. moderate or high.
c. at the higher level.
d. low or very low.
The correct option is c.
Feedback: Section 12.3 Designing substantive procedures
4. If the lower assessed level of control risk approach preliminary audit strategy is used,
the planned level of substantive procedures will be:
a. at the lower level.
b. moderate or high.
c. at the higher level.
d. high or very high.
The correct option is a.
Feedback: Section 12.3 Designing substantive procedures
,5. Which of these would be a reason for adopting a predominantly substantive
approach?
a. accounts are affected by more than one transaction class.
b. detection risk has been assessed as high.
c. there are no significant control procedures that pertain to the assertion.
d. control risk has been assessed as low.
The correct option is c.
Feedback: Section 12.2 Determining detection risk
6. For small clients it is often more efficient to adopt the predominantly substantive
approach. Which of the following is a reason for this:
a. they may not have adequate resources to implement all appropriate controls.
b. controls may not be effective.
c. the size of the entity may make it inefficient for the auditor to rely on these
controls.
d. all of the above.
The correct option is d.
Feedback: Section 12.2 Determining detection risk
7. Which of these would not necessarily be considered to be a risk factor for potential
misstatements?
a. there is intense price competition in the industry of operation.
b. profit margin has increased and inventory turnover days has decreased
c. an employee in the cash office was passed over for a promotion.
d. segregation of duties is not practiced.
The correct option is b.
Feedback: Section 12.1 Assessing the risk of material misstatement
8. For a particular account balance assertion, the auditor is most likely to be able to
avoid substantive tests of details with which of these set of risk assessments?
Inherent Control Results of analytical procedures
A. Maximum Maximum Unexpected
B. Maximum Maximum Expected
C. Low Low Expected
D. Low Low Unexpected
a. A
b. B
, c. C
d. D
The correct option is c.
Feedback: Section 12.3 Designing substantive procedures
9. Which of these is not considered a substantive procedure?
a. analytical procedures.
b. tests of controls.
c. tests of detail of transactions.
d. tests of detail of balances.
The correct option is b.
Feedback: Section 12.3 Designing substantive procedures
10. The least costly form of testing is usually:
a. analytical procedures.
b. tests of controls.
c. tests of detail of transactions.
d. tests of detail of balances.
The correct option is a.
Feedback: Section 12.3 Designing substantive procedures
11. Which of these is not normally a distinct phase involved in using generalised audit
software?
a. using the primarily substantive approach in planning the audit.
b. identification of the relevant audit objective and tests to be performed.
c. designing the application and form of the output.
d. processing the application and reviewing the results.
The correct option is a.
Feedback: Section 12.3 Designing substantive procedures
12. Generalised audit software can be used for:
a. performing calculations.
b. selecting samples.
c. identifying records meeting specified criteria.
d. any of the above.
The correct option is d.
Feedback: Section 12.3 Designing substantive procedures
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