In auditing accounts receivable, the negative form of confirmations request is used when A. Response rate to positive confirmation request was low B. The total amount of account receivable is immaterial to the financial statement taken as a whole C. Recipients are likely to return positive confirmation without verifying the information D. The combined assessed level of both inherent risk and control risk relative to account receivable is low

Which of the following statements about confirming accounts receivable (A/R) and accounts payable (A/P) is true?   Question options:   A/R confirmations are more likely to include the client's balance than A/P confirmations.   A/R and A/P are always confirmed regardless of the materiality of the balance or risks of material misstatement.   The assertion with the highest risk of material misstatement for A/R and A/P is Existence.   Positive and negative confirmations are always used to audit A/R and A/P.

Which of the following is consistent with an assessed level of control risk at below the maximum level after completing the auditors consideration of the client's internal control over receivables? * a. Increased materiality level in selecting receivables to be confirmed and use a positive confirmation letter. b. Increased materiality level in selecting receivables to be confirmed and use a negative confirmation letter. c. Decrease materiality level in selecting receivables to be confirmed and use a negative confirmation letter. d. Decrease materiality level in selecting receivables to be confirmed and use a positive confirmation letter. e. None of the above

Which of the following is most closely related to the relevance of audit evidence?a. Auditors decide to physically inspect investment securities held by a custodian instead of obtaining confirmations from the custodian.b. In addition to confirmations of accounts receivable, auditors perform an analysis of the aging of accounts receivable to evaluate the collectability of accounts receivable.c. In response to less effective internal control, auditors increase the number of customer accounts receivable confirmations mailed compared to that in the prior year.d. Because of a large number of transactions occurring near year-end, auditors decide to confirm a larger number of receivables following year-end instead of during the interim period.

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

The auditor is typically concerned with two major types of mistakes that materially impact the financial statements when testing controls and when performing substantive testing. Identify the pair of the major mistakes as:   A) Risk of Assessing Control Risk Too Low/Risk of Incorrect Rejection B) Risk of Assessing Control risk Too High/Risk of Incorrect Rejection C) Risk of Assessing Control Risk Too Low/Risk of Incorrect Acceptance

Which of the following evidence provides the least assurance of reliability? A. Accounts receivable B. Sales invoice C. Vendor invoice D. Bank statements

S1: Stratification in audit sampling enables the auditor to direct his efforts towards the items he considers would potentially contain the greater monetary error. S2: When performing substantive procedures, an account balance or class of transactions is often stratified by monetary value.    a. BOTH STATEMENTS ARE TRUE b. BOTH STATEMENTS ARE FALSE c. ONLY S1 IS TRUE d. ONLY S2 IS TRUE

The competence (reliability) of audit evidence cannot be improved by testing a larger sample of items. True  False Objective evidence is more reliable, and hence more persuasive, than subjective evidence. True  False Audit evidence related to balance sheet accounts is more persuasive when it is accumulated during the entire period under audit, than when it is obtained only during the period near the balance sheet date. True  False Cost should never be a consideration when making decisions about evidence for a given audit. True  False

When an auditor decreases the planned assessed level of control risk because certain control procedures were determined to be more effective than anticipated, the auditor would most likely increase the: a. Extent of tests of details. b. Level of inherent risk. c. Extent of tests of controls. d. Level of detection risk.