Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
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Question
Chapter 6, Problem 38LOQ
To determine
Identify the overall response most likely to fraud risk identified in the audit.
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Students have asked these similar questions
Which sentence below is true about audit risk:
A.
Audit risk is the risk that a company may hire an incompetent auditor.
B.
Audit risk can be completely eliminated through appropriate sampling of transactions.
C.
Audit is what creates the demand for an audit.
D.
Audit risk is the risk that a "clean" opinion will be issued when, in reality, the financial statements are materially misstated..
The requirement for an attitude of scepticism means that the auditor should
A) perform additional tests of controls to increase the probability of discovering fraud or errors. B) plan and conduct the audit with an attitude of distrust in management. C) not be blind to evidence that suggests the documents, books, or records have been altered or are incorrect. D) not consider management's explanation as evidence on any subject
Which of the following would a fraudster perceive as a pressure?A. lack of management oversightB. everyone does itC. living beyond one’s meansD. lack of an internal audit function
Chapter 6 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 6 - Prob. 1RQCh. 6 - Prob. 2RQCh. 6 - Prob. 3RQCh. 6 - Discuss what is meant by the phrase shopping for...Ch. 6 - Prob. 5RQCh. 6 - Prob. 6RQCh. 6 - Prob. 7RQCh. 6 - Prob. 8RQCh. 6 - Prob. 9RQCh. 6 - Prob. 10RQ
Ch. 6 - Prob. 11RQCh. 6 - Prob. 12RQCh. 6 - Prob. 13RQCh. 6 - Prob. 14RQCh. 6 - Prob. 15RQCh. 6 - What is meant by making a proper year-end cutoff?...Ch. 6 - Prob. 17RQCh. 6 - Prob. 18RQCh. 6 - Prob. 19RQCh. 6 - Prob. 20RQCh. 6 - Auditing standards require the auditors to have a...Ch. 6 - Prob. 22RQCh. 6 - Prob. 23RQCh. 6 - Prob. 24QRACh. 6 - Prob. 25QRACh. 6 - Prob. 26QRACh. 6 - Prob. 27QRACh. 6 - Prob. 28QRACh. 6 - Prob. 29QRACh. 6 - Prob. 30QRACh. 6 - Prob. 31QRACh. 6 - Prob. 32QRACh. 6 - Prob. 33QRACh. 6 - Prob. 34QRACh. 6 - Prob. 35QRACh. 6 - Prob. 36QRACh. 6 - Prob. 37QRACh. 6 - Prob. 38AOQCh. 6 - Prob. 38BOQCh. 6 - Prob. 38COQCh. 6 - Prob. 38DOQCh. 6 - Prob. 38EOQCh. 6 - Prob. 38FOQCh. 6 - Prob. 38GOQCh. 6 - Prob. 38HOQCh. 6 - Prob. 38IOQCh. 6 - Prob. 38JOQCh. 6 - Prob. 38KOQCh. 6 - Prob. 38LOQCh. 6 - Prob. 39OQCh. 6 - Prob. 40OQCh. 6 - Prob. 41OQCh. 6 - Prob. 42AOQCh. 6 - Prob. 42BOQCh. 6 - Prob. 42COQCh. 6 - Tracing from source documents to journals most...Ch. 6 - Vouching from journals (or ledgers) to source...Ch. 6 - For each definition (or portion of a definition)...Ch. 6 - Prob. 44PCh. 6 - Prob. 45PCh. 6 - Tammy Potter, a new partner with the regional CPA...
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Similar questions
- Which of the following statements is not true? a. The auditor’s main duty is the detection and prevention of fraud b. Management fraud is more difficult to detect than employee fraud c. All of these statements are true. d. Internal control system reduces the errors and fraudarrow_forwardAuditors have two strategies to choose from, the lower-assessed control risk strategy and the predominantly substantive strategy. Which of the following statements about the two audit strategies is incorrect? A. If the client’s internal controls appear to be effective, the auditor must use the lower assessed control risk strategy. B. When internal controls are effective in preventing errors in the financial statement, auditors can use the lower-assessed control risk strategy. C. Auditors can always choose to use the predominantly substantive strategy regardless of the control risk assessment. D. When internal controls are not effective in preventing errors in the financial statement, auditors need to use the predominantly substantive strategy. E. Compared to the predominantly substantive strategy, the lower-assessed control risk strategy is more cost-efficient.arrow_forwardWhich 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_forward
- When it comes to control systems and materiality, why may fraud examiners' perspectives be different from those of other auditors?arrow_forwardPrepare a broad audit plan:1. What material types of transactions and transaction cycles are involved?2. What are the high-risk areas?3. What are the low-risk areas?4. If management faced tremendous pressure regarding the entity’s financial performance, what opportunities might exist for them to engage in fraudulent financial reporting?5. To what extent do you believe it will be appropriate to reduce assessed control risk?6. How will audit effort be allocated among geographical areas?7. What form of auditors’ report do you expect will be issued; what does it mean?8. Indicate as an appendix to the report how the project team was organized and how it functioned on the project and submit appendix with Team Project.arrow_forwardPlease explain how you arrived at the correct answer. Thank you. 1. Auditors must consider fraud in their audits. Which is not a key consideration? A) whether fraud is present. B) whether technology is involved. C) whether fraud is material. D) all of these are truearrow_forward
- The risk of not detecting a misstatement resulting from fraud is greater than that resulting from error because Group of answer choices It is the responsibility of the management to detect fraud and the auditor’s responsibility is confined only to the detection of material errors The auditor designs procedures that only detect material misstatements from error Fraud involves acts designed to conceal it, such as collusion, forgery, or deliberate failure to record transactions. The professional standards do not require the auditor to discover information that is indicative of fraudarrow_forwardIn applying a top-down, risk-based approach to an audit, should the auditor start with the ending account balances or does the auditor start with the significant processes that lead to a material account balances? Is one approach preferred over the other? Explain. In what ways does the practice of internal auditing differ from the practice of public accounting? To whom is the internal auditing function responsible?arrow_forwardWhich of the following statements is not true with respect to written representations?a. The failure of management to furnish them is a significant scope limitation, resulting in either an adverse opinion or a disclaimer of opinion.b. They should address management’s responsibility for designing internal control to prevent and detect fraud.c. Auditors use them to corroborate information received during the audit from the client and its employees.d. They are dated the same date as the auditor’s reports.arrow_forward
- When planning the audit, the auditor must make enquiries of management. Which one of the following is not an appropriate enquiry of management about fraud? a.The auditor should ask management if they are personally engaged in fraudulent activity, including fraudulent financial reporting and misappropriation of assets. b.The auditor should ask about management's communications with employees about ethical behavior. c.The auditor should ask management about any communications with those charged with governance regarding its processes for identifying and responding to the risks of fraud in the entity. d.The auditor should ask management about their assessment of the risk that the financial statements may be materially misstated due to fraud.arrow_forwardAudit evidence obtained through inquiry of management about proper segregation of custodianship and recordkeeping functions is less reliable than evidence acquired through the auditor's personal observation. TRUE OR FALSE? WHY?arrow_forwardThe primary difference between operational auditing and financial auditing is that in operational auditinga. The operational auditor is not concerned with whether the audited activity is generating information in compliance with financial accounting standards.b. The operational auditor is seeking to help management use resources in the most effective manner possible.c. The operational auditor starts with the financial statements of an activity being audited and works backward to the basic processes involved in producing them.d. The operational auditor can use analytical skills and tools that are not necessary in financial auditing.arrow_forward
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