Auditing Chapter 9 Exam Bank Solution Manual Latest Update (Already Passed)
1) Which of the following would not increase the risks of material misstatement at the overall financial statement level?
A) effective oversight by the board of directors
B) deficiencies in management's integrity
C) in...
1) Which of the following would not increase the risks of material misstatement at the overall financial
statement level?
A) effective oversight by the board of directors
B) deficiencies in management's integrity
C) inadequate accounting systems
D) all of the above - Answers A) effective oversight by the board of directors
2) The auditor's responsibility section in an audit report states that "...the standards require that we
plan and perform the audit to obtain ________ assurance about whether the financial statements are
free of material misstatement." What type of assurance is given?
A) immediate
B) limited
C) reasonable
D) absolute - Answers C) reasonable
3) ________ risk represents the auditor's assessment of the susceptibility of an assertion to material
misstatement, before considering the effectiveness of the client's internal control.
A) Material
B) Account balance
C) Control
D) Inherent - Answers D) Inherent
4) Risk of material misstatement at the assertion level
A) is only relevant to account balances.
B) determines the nature, timing, and extent of further audit procedures.
C) refers to risks that are pervasive to the financial statements as a whole.
D) consists of business risk and inherent risk. - Answers B) determines the nature, timing, and extent of
further audit procedures.
1) Risk assessment procedures include inquiries of management and others by the auditor. As part of
these procedures, the auditor should talk to
, A) internal auditors.
B) board of directors.
C) individuals involved with regulatory compliance.
D) all of the above - Answers D) all of the above.
2) Risk assessment procedures include
A) a required discussion among the staff members of the audit and the client regarding material
misstatements in the financial statement.
B) determination of the type of audit opinion to issue.
C) observation of the entity's operations.
D) assessing acceptable audit risk. - Answers C) observation of the entity's operations.
1) When considering the risk of misstatement due to fraud,
A) the risk of not detecting a material misstatement due to fraud is lower than the risk of not detecting a
misstatement due to error.
B) the risk is only made at the financial statement level.
C) auditing standards require the auditor to presume that risk of fraud exist in expense transactions.
D) auditing standards outline procedures the auditor should perform to obtain information from
management about their consideration of fraud. - Answers D) auditing standards outline procedures the
auditor should perform to obtain information from management about their consideration of fraud.
1) A ________ risk represents an identified and assessed risk of material misstatement that, in the
auditor's professional judgment, requires special audit consideration.
A) material
B) substantial
C) financial statement
D) significant - Answers D) significant
2) Which of the following will generally be considered a significant risk?
A) a sale to a customer
B) the determination of the amount of bad debt expense
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