Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN: 9781337619455
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: Cengage Learning
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Question
Chapter 6, Problem 11CYBK
To determine
Introduction: The procedures performed by an auditor to procure accuracy and reliability about the management’s assertion is known as substantive analytical procedures. Substantive analytical procedures are performed by an auditor based on their opinion about the effectiveness of company’s internal control.
The scenarios in which the analytical procedures are most appropriate as the substantive analytical procedures.
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Students have asked these similar questions
Why is the audit team more concerned with controlling the exposure to the risk of overreliancethan with the risk of underreliance?a. Only the risk of overreliance results in an incorrect audit decision.b. The risk of underreliance is not related to the audit team’s study and evaluation of internalcontrol.c. The risk of overreliance can ultimately result in the audit team’s failing to reduce auditrisk to acceptable levels.d. The risk of underreliance can be controlled by performing tests of controls during theinterim period.
Which statement is false?
a. If control risk is assessed as low, the auditor cannot plan on relying on the controls to increase substantive procedures for account balances.
b. The auditor will not perform tests of controls; instead, the auditor must plan for substantive procedures, without relying on the client's internal controls.
c. Based on obtaining an understanding through risk assessment procedures, the auditor assesses control risk ranging from high (weak controls) to low (strong controls).
d. Assessing control risk as high means the auditor does not have confidence that internal controls will prevent or detect material misstatements; assessing control risk as low has the opposite implication.
In deciding upon the acceptable risk of incorrect acceptance for an account, an auditor considers each of the following except
a. Audit risk.
b.Tolerable error.
c.The risk that internal controls fail to detect material misstatements that have occurred.
d. The risk that analytical procedures and other tests fail to detect material errors that occur and that are not detected by internal control.
Chapter 6 Solutions
Auditing: A Risk Based-Approach (MindTap Course List)
Ch. 6 - Prob. 1CYBKCh. 6 - Prob. 2CYBKCh. 6 - Prob. 3CYBKCh. 6 - Which of the following statements is true...Ch. 6 - Prob. 5CYBKCh. 6 - Prob. 6CYBKCh. 6 - Prob. 7CYBKCh. 6 - Prob. 8CYBKCh. 6 - Prob. 9CYBKCh. 6 - Prob. 10CYBK
Ch. 6 - Prob. 11CYBKCh. 6 - Prob. 12CYBKCh. 6 - Prob. 13CYBKCh. 6 - Prob. 14CYBKCh. 6 - Prob. 15CYBKCh. 6 - Prob. 16CYBKCh. 6 - Prob. 17CYBKCh. 6 - Prob. 18CYBKCh. 6 - Prob. 19CYBKCh. 6 - Prob. 20CYBKCh. 6 - Prob. 1RQSCCh. 6 - Prob. 2RQSCCh. 6 - Prob. 3RQSCCh. 6 - Prob. 4RQSCCh. 6 - Refer to Exhibit 6.2 and describe the differences...Ch. 6 - Prob. 6RQSCCh. 6 - Prob. 7RQSCCh. 6 - Prob. 8RQSCCh. 6 - Prob. 10RQSCCh. 6 - Prob. 11RQSCCh. 6 - Prob. 12RQSCCh. 6 - Prob. 13RQSCCh. 6 - Prob. 14RQSCCh. 6 - Prob. 15RQSCCh. 6 - Indicate how the auditor could use substantive...Ch. 6 - Prob. 17RQSCCh. 6 - Prob. 18RQSCCh. 6 - Prob. 19RQSCCh. 6 - Prob. 20RQSCCh. 6 - Prob. 21RQSCCh. 6 - Prob. 22RQSCCh. 6 - Prob. 23RQSCCh. 6 - Prob. 24RQSCCh. 6 - Prob. 25RQSCCh. 6 - Prob. 26RQSCCh. 6 - Prob. 27RQSCCh. 6 - Prob. 28RQSCCh. 6 - Prob. 29FFCh. 6 - Prob. 30FFCh. 6 - Prob. 31FFCh. 6 - Prob. 32FFCh. 6 - Prob. 33FFCh. 6 - MINISCRIBE (LO 1, 2) As reported in the Wall...
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Similar questions
- Generally, which of the following audit procedures is the least expensive to perform? A. Analytical procedures B. Tests of details of balance C. Substantive tests of transactions D. Tests of controls E. Risk assessment proceduresarrow_forwardFrom the options given below which of the following is not the reason of inherent limitation of audit? a. Limitation in accounting system O b. Use of human judgment O c. Poor planning O d. Human errorsarrow_forwardWhich of the following is appropriate about risk assessment? A. The assessed level of inherent and control risk can be sufficiently low, thus resulting to eliminating the need for substantive tests. B. Audit risk may be more effectively determined by assessing inherent and control risk separately. C. Detection risk is eliminated if an auditor were to examine 100 percent off the account balance or class of transactions. D. There is an iverse relationship between detection risk and the combined level of inherent and control riskarrow_forward
- Which of the following is an incorrect statement? a. The amount of audit work should vary inversely with the likelihood of material misstatements existing in the accounting records. b. The better the organization’s control structure, the less likely it is that material misstatements will be present c. Complex or unusual transactions are more likely to be recorded in error than recurring or routine transactions are d. If misstatements are likely to occur in the recording process, the auditor should develop procedures to detect misstatements.arrow_forwardTests of controls are most likely to be omitted when(1) an account balance reflects many transactions.(2) control risk is assessed at less than the maximum.(3) the understanding of the control structure indicates that evaluating the effectiveness of control policies and procedures is likely to be inefficient.(4) the auditor wishes to increase the acceptable level of detection risk.arrow_forwardWhich of the following is least likely to be a factor that might indicate to an auditor that an identified risk of misstatement requires special audit consideration? Complex calculations are involved, The rate of technical change is moderate in the industry, The potential for fraud seems high, Various subjective methods of application of a key accounting policy existarrow_forward
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