Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Chapter 6, Problem 21.1MCQ
To determine
Indicate the major reason for an independent auditor to gather audit evidence.
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The major reason an independent auditor gathers audit evidence is to(1) form an opinion on the financial statements. (3) evaluate management.(2) detect fraud. (4) assess control risk.
The most important objective of risk assessment procedures performed by auditor is
a.
To identify and assess financial risk in the activities of the entity
b.
To identify and assess the risk in achieving the entity objectives
c.
To detect material misstatements in the financial statements
d.
To detect errors and fraud occurred in the books of accounts
Analytical procedures used in planning an audit should focus on identifying(1) material weaknesses in internal control.(2) the predictability of financial data from individual transactions.(3) the various assertions that are embodied in the financial statements.(4) areas that may represent specific risks relevant to the audit.
Chapter 6 Solutions
Auditing And Assurance Services
Ch. 6 - Prob. 1RQCh. 6 - Prob. 2RQCh. 6 - Prob. 3RQCh. 6 - Prob. 4RQCh. 6 - Prob. 5RQCh. 6 - Prob. 6RQCh. 6 - Prob. 7RQCh. 6 - What are the six elements of professional...Ch. 6 - What are the five elements of an effective...Ch. 6 - Describe two of the more common judgment traps and...
Ch. 6 - Identify the cycle to which each of the following...Ch. 6 - Why are sales, sales returns and allowances, bad...Ch. 6 - Prob. 13RQCh. 6 - Prob. 14RQCh. 6 - Prob. 15RQCh. 6 - Prob. 16RQCh. 6 - Prob. 17RQCh. 6 - Prob. 18RQCh. 6 - Prob. 19RQCh. 6 - Prob. 20RQCh. 6 - Prob. 21.1MCQCh. 6 - Prob. 21.2MCQCh. 6 - Prob. 21.3MCQCh. 6 - Prob. 22.1MCQCh. 6 - Prob. 22.2MCQCh. 6 - Prob. 22.3MCQCh. 6 - Prob. 23.1MCQCh. 6 - Prob. 23.2MCQCh. 6 - Prob. 23.3MCQCh. 6 - Prob. 24.1MCQCh. 6 - Prob. 24.2MCQCh. 6 - Prob. 24.3MCQCh. 6 - Prob. 25DQPCh. 6 - Prob. 26DQPCh. 6 - Prob. 27DQPCh. 6 - Prob. 28DQPCh. 6 - Prob. 29DQPCh. 6 - Prob. 30DQPCh. 6 - Prob. 31DQPCh. 6 - Prob. 32DQPCh. 6 - Prob. 33DQPCh. 6 - Prob. 34DQP
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- Professional guidance indicates that the auditor should consider revenue recognition to be high risk in planning an audit of a company’s financial statements. a. Identify the activities that affect the revenue cycle. b. Identify the financial statement accounts typically associated with the revenue cycle.arrow_forwardRisk assessment procedures are performed by auditors to: a. detect material misstatements in the financial statements. b. distribute the information needed to perform control activities. c. express an opinion on the financial statements. d. identify and assess the risks in achieving the entity’s objectives.arrow_forwardTests of controls in a GAAS audit are required fora. Obtaining evidence about the financial statement assertions.b. Accomplishing control over the occurrence of recorded transactions.c. Applying analytical procedures to financial statement balances.d. Obtaining evidence about the operating effectiveness of client control activitiearrow_forward
- The primary purpose of accumulating sufficient and appropriate audit evidence is to Group of answer choices a. Support the auditor’s opinion on the financial statements. b. Detect fraud in the financial statements. c. Defend the auditor in case of legal dispute. d. Evaluate the performance of the management of an entity.arrow_forwardWhen performing a financial statement audit, auditors are required to explicitly assess the risk of material misstatement due to:Select one: a. Illegal acts. b. Fraud. c. Business risk. d. Errors.arrow_forwardTests of controls in a GAAS audit are required fora. Obtaining evidence about the financial statement assertions.b. Accomplishing control over the occurrence of recorded transactions.c. Applying analytical procedures to financial statement balances.d. Obtaining evidence about the operating effectiveness of client control activities.arrow_forward
- The auditor should consider audit risk when planning and performing an audit of financial statements. Audit risk should also be considered together in determining the nature, timing, and extent of auditing procedures and in evaluating the results of those procedures. Required: a. Define audit risk b. Describe the components of audit risk (e.g., inherent risk, control risk, and detection risk). c. Explain how these components are interrelatedarrow_forwardThe main object of an audit is a. Expression of expert opinion b. Detection and Prevention of fraud and error c. Examination of books of accounts d. Preparation of financial statementsarrow_forwardThe auditor should consider audit risk when planning and performing an audit of financial statements. Audit risk should also be considered together in determining the nature, timing, and extent of auditing procedures and in evaluating the results of those procedures. Required: a. Define audit risk. b. Describe the components of audit risk (e.g., inherent risk, control risk, and detection risk). c. Explain how these components are interrelated. (AICPA, adapted)arrow_forward
- d. Internal auditing is also known as operational auditing. e. BIR auditing is also known as compliance auditing. f. The internal auditor is directly concerned with the detection and prevention of fraud.arrow_forward2. An auditor is required to obtain sufficient understanding of each component of an entity’s internal control system to plan the audit of the entity’s financial statements and to assess control risk for the associated assertions in the account balance, transaction class, and disclosure components of the financial statements. a. Define Internal Control b. For what purpose should an auditor’s understanding of the internal control components be used in planning an audit? c. What are an auditor’s documentation requirements concerning an entity’s internal control system and the assessed level of control riskarrow_forward(i) Which of the following statements correctly explains the responsibility of the external auditor?A. Responsibility to provide reasonable assurance that the financial statements are free from material error or misstatement.B. Responsibility for identifying and correcting any errors or misrepresentations in the financial statements.C. Responsibility for the reliability of the information that financial statements provide.D. Responsibility to prepare financial statements. (ii) Operational controls are designed to prevent failures in operational procedures caused by: i. Machine breakdown and human error ii. Failures in the performance of systems and weaknesses in procedures. iii. Poor management iv. Risks of errors or fraud in accounting systems and accounting and finance activities. A. i and ii onlyB. i, ii and iii onlyC. i, ii and iv onlyD. All of the above (iii) Risk tolerance refers to A. The amount of risk the company is prepared to accept in order to achieve its financial…arrow_forward
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