An auditor generally uses analytical procedures to obtain evidence regarding estimates. Question 29 options: True False
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An auditor generally uses analytical procedures to obtain evidence regarding estimates.
Question 29 options:
| True | |
| False |
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Solved in 2 steps
- 71 Which of the following is not one of the primary approaches that the auditors may use when evaluating the reasonableness of accounting estimates? Group of answer choices Review and test management's process of developing estimates. Confirm estimates directly with outsiders. Review subsequent events or transactions that have bearing on the estimate. Independently develop an estimate of the amount to be compared to management's estimate.Which level of assurance the auditor shall obtain so that financial statements are free from material misstatements? a. High degree of Assurance b. Absolute Assurance c. Reasonable Assurance d. Moderate AssuranceWhich of the following presumptions is correct about the reliability of evidential matter? a. To be reliable, evidential matter should be convincing rather than persuasive. O b. Reliability of evidential matter refers to the amount of corroborative evidence obtained. O c. Effective internal control provides more assurance about the reliability of evidential matter. O d. Information obtained indirectly from outside sources is the most reliable evidential matter.
- Characteristics that affect the reliability of evidence include: a. Form of the evidence obtained b. All options are correct. c. Independence of the provider of evidence d. Auditors direct knowledge of the evidenceWhich of the following risk types increase when an auditor performs substantive analytical audit procedures for financial statement accounts at an interim date?a. Inherent.b. Control.c. Detection.d. Sampling.Risk of incorrect rejection is defined as _______. the risk that the auditor concludes that a material misstatement does not exist when it does exist the risk that the auditor concludes that a material misstatement exists when it does not exist the risk that an auditor incorrectly rejects a client the risk that management may reject the audit opinion issued by the auditor An advantage of statistical sampling _______. is that it allows an auditor to measure control risk is that it allows an auditor to measure sampling risk is that it allows an auditor to measure inherent risk is that it is cheaper to perform, resulting in lower audit fees for the client
- S1: The concept of materiality would be very important to an auditor in determining transactions that should be validated.S2: The level of assurance expected to be issued affects the amount of procedures to be performed by the practitioner. Group of answer choices Only S1 is correct. Both S1 and S2 are incorrect. Both S1 and S2 are correct. Only S2 is correct.FASB ASC 715–60: Compensation–Retirement Benefits–Defined Benefit Plans–Other Postretirement (previously Statement of Financial Accounting Standards No. 106) establishes accounting standards for postretirement benefits other than pensions, most notably postretirement health care benefits. Essentially, the standard requires companies to accrue compensation expense each year employees perform services, for the expected cost of providing future postretirement benefits that can be attributed to that service. Typically, companies do not prefund these costs for two reasons: (a) unlike pension liabilities, no federal law requires companies to fund nonpension postretirement benefits and (b) funding contributions, again unlike for pension liabilities, are not tax deductible. (The costs aren’t tax deductible until paid to, or on behalf of, employees.) Required: 1. As a result of being required to record the periodic postretirement expense and related liability, most companies now report lower…The process of looking at a procedure or process being performed by others by the auditor is called what ? Observation Inquiry Inspection None of the given options
- From the options given below identify type of risk in case auditor unable to provide appropriate audit opinion. a. Audit risk O b. None of the options O c. Control risk O d. Inherent limitationTolerable error, is the maximum monetary error that the auditor is prepared to accept in the population and still conclude that audit objective has been achieved, is directly related to A.Sample size BAudit risk C.Materiality D.Expected errorWhich two of the following statements regarding the use of analytical procedures of the audit are correct? i. Analytical procedures are used to test the effectiveness of the design of policies. ii. Analytical procedures involves inquiries and observation of routines to obtain evidences. iii. Analytical procedures help to identify unusual fluctuations for investigation. iv. Analytical procedures can assist the auditor in planning other audit procedures. a. iii and iv b. i and ii c. ii and iv d. ii and iii
