Quality Control and Engagement Standards- Test 5

When inherent and control risks are high, acceptable detection risk needs to be low to reduce audit risk to________. When inherent and control risks are low, an auditor can accept a higher detection risk and still reduce audit risk to___________.

Standards on Auditing require that ___________ discuss the susceptibility of the entity’s financial statements to material misstatement.

Risks of material misstatement at the overall financial statement level refer to risks of material misstatement

Which of the following statement is correct?

When inherent and control risks are high, acceptable detection risk needs to be

Assertions sued by the auditor to consider the different types of potential misstatements in relation to transactions occurred during the year include:

Policies and procedures that help ensure that management directives are carried out are known as:

Which of the following is not a component of internal control system?

There are a number of specific elements that usually contribute to a successful control environment and which may be used as indicators of the quality of the control environment of a particular organisation. Which of the following is not one of the these elements?

The preliminary assessment of control risk includes all the following procedures except:

Process to asses the effectiveness of internal control performance over time is known as:

The most emphasis by auditors is placed on understanding which of the following types of controls?

Judgement a materiality are made in light of surrounding circumstances, and are affected by the_________of a misstatement, or a combination of both.

Judgments about materiality are made in the light of surrounding circumstances, and are affected by:

Which of the following might be a commonly used guideline related to a financial statement materiality base?

The auditor’s determination of materiality is a matter of_____________, and is affected by the auditor’s perception of the financial information needs of users of the F.S.

The concept of materiality is applied by the auditor in___________the audit & in evaluating the effect of identified misstatements on audit and of uncorrected misstatements, if any, on the F.S. and in forming the opinion in auditor’s report.

Performance materiality means the amount or amounts set by the auditor at,________ materiality for the financial statements as a whole, a reduce to an appropriately low level, the probability that the aggregate of uncorrected and undetected misstatements, exceeds materiality for the financial statements as a whole.

SA 320 on “Materiality in planning and performing an audit” requires that an auditor should consider materiality and its relationship with__________while conducting an audit.

Misstatements, including omissions, are considered to be material if, individually or in the aggregate:

As per SA 330, which of the following factors do not warrant retesting of controls:

As per SA 330, external confirmations may be used as substantive procedure. Areas in which external conformations may be obtained are:

In the context of an audit of financial statements, substantive tests are audit procedures that

Substantive procedures comprise of:

The auditor’s primary consideration is whether, and how, a specific control prevents, or detects and corrects:

When deviations from controls upon which the auditor intends to rely are detected, the auditor shall make specific inquiries to understand these matters and their potential consequences, and shall determine whether:

When substantive procedures are performed at an interim date, the auditor shall cover the remaining period by performing:

In the course of audit of Z Ltd, its auditor wants to rely on audit evidence obtained in previous audit in respect of effectiveness of internal controls instead of retesting the same during the current audit.

The auditor’s decision on whether to rely on audit evidence obtained in previous audits for controls that: (a) have not changed since they were last tested; and (b) are not controls that mitigate a significant risk; is a matter of professional judgment. In addition, the length of time between retesting such controls is also a matter of professional judgment, but is required to be at least

Determining materiality involves the exercise of professional judgment. A percentage is often applied to a chosen benchmark as a starting point in determining materiality for the financial statements as a whole. Factors that may affect the identification of an appropriate benchmark include the following: