Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Question
Chapter 9, Problem 34DQP
a.
To determine
Explain the meaning of low, medium and high for each of four risks and planned evidence.
b.
To determine
Fill up the blanks in planned detection risk and planned evidence using the low, medium or high.
c.
To determine
State the effect on planned evidence (increase or decrease) of changing each of the given factors.
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Define the audit risk model and explain each term in the model.Also describe which two factors of the model when combined reflect the risk of materialmisstatements.
Q. If the auditor traces a sample of receiving reports to the inventory records, the auditor is testing the
control of validity. Options: A. True B. False
The auditing assesses the reliability and sufficiency of the information through _____________
a.
Comparison
b.
Testing
c.
Evaluation
d.
Judgement
Chapter 9 Solutions
Auditing And Assurance Services
Ch. 9 - Prob. 1RQCh. 9 - Prob. 2RQCh. 9 - Provide two examples of factors that might...Ch. 9 - Prob. 4RQCh. 9 - Prob. 5RQCh. 9 - Prob. 6RQCh. 9 - Prob. 7RQCh. 9 - Prob. 8RQCh. 9 - Prob. 9RQCh. 9 - Prob. 10RQ
Ch. 9 - Prob. 11RQCh. 9 - Prob. 12RQCh. 9 - Prob. 13RQCh. 9 - Prob. 14RQCh. 9 - Prob. 15RQCh. 9 - Prob. 16RQCh. 9 - Prob. 17RQCh. 9 - Prob. 18RQCh. 9 - Prob. 19RQCh. 9 - Prob. 20RQCh. 9 - Prob. 21RQCh. 9 - Prob. 22RQCh. 9 - Prob. 23RQCh. 9 - Prob. 24RQCh. 9 - Prob. 25.1MCQCh. 9 - Prob. 25.2MCQCh. 9 - Prob. 25.3MCQCh. 9 - Prob. 26.1MCQCh. 9 - Prob. 26.2MCQCh. 9 - Prob. 26.3MCQCh. 9 - Prob. 27.1MCQCh. 9 - Prob. 27.2MCQCh. 9 - Prob. 27.3MCQCh. 9 - Prob. 28.1MCQCh. 9 - Prob. 28.2MCQCh. 9 - Prob. 28.3MCQCh. 9 - Prob. 29DQPCh. 9 - Prob. 30DQPCh. 9 - Prob. 31DQPCh. 9 - Prob. 33DQPCh. 9 - Prob. 34DQPCh. 9 - Prob. 35DQPCh. 9 - Prob. 36DQPCh. 9 - Prob. 37DQPCh. 9 - Prob. 39C
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- When evaluating inventory controls, an auditor would be least likely toa. Inspect documents.b. Make inquiries.c. Observe procedures.d. Consider policy and procedure manualsarrow_forwardAn auditor selected items for test counts while observing a client’s physical inventory. The auditor then traced the test counts to the client’s inventory listing. This procedure most likely obtained evidence concerning management’s balance assertion ofa. Rights and obligations.b. Completeness.c. Existence.d. Valuation and allocationarrow_forwardAs part of your audit of a client's inventory balance, you created an expectation of what should be the inventory balance by using the gross profit method. The difference between your expectation using the gross profit method of estimating inventory as against the client reported balance is above audit materiality level for audit of inventory. What should you do next? a. Discuss with the management the implication of the significant difference and propose an adjusting journal entry accordingly.b. Extend audit procedures by doing further analytical procedures on the inventory balance.c. Extend audit procedures by doing test of details of the account balance.d. Issue a qualified opinion on the basis of a material misstatement in the client's inventory.e. None of the abovearrow_forward
- 9-34 (Objectives 9-5, 9-8) Following are six situations that involve the audit risk model as it is used for planning audit evidence requirements in the audit of inventory. Required Explain what low, medium, and high mean for each of the four risks and planned evidence. Fill in the blanks for planned detection risk and planned evidence using the terms low, medium, or high. Using your knowledge of the relationships among the foregoing factors, state the effect on planned evidence (increase or decrease) of changing each of the following five factors, while the other three remain constant: A decrease in acceptable audit risk A decrease in control risk A decrease in planned detection risk A decrease in inherent risk A decrease in inherent risk and an increase in control risk of the same amount (Could explained better, Please) Thanksarrow_forwardIdentify FIVE risks of misstatement of revenue in the financial statements. For each risk identified, state a possible control and suggest a test the auditor could perform to test your controls. (Present the answer in three columns, headed “Risk”, “Control” and “Test”).arrow_forwardTo allocate the preliminary estimate of materiality to the accounts, the auditor might consider A. The relative variability of the accounts. B.The size, in absolute terms, of each account. C.Using the audit risk equation to calculate the amount of materiality to each account. D.Adjusting detection risk for each account to arrive at consistent materiality amounts across accounts.arrow_forward
- Auditors identify and assess the risk of material misstatement at these two levels Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Financial Statement level and Information Process Goals level b Financial statement level and Operations Process Goals level c Information Process Goals level and Operations process goals level d Financial Statement Level and Relevant Assertion Levelarrow_forwardWhat are the components of Audit Risk? Use the Audit risk equation and briefly explain the components of audit risk.arrow_forwardWhich of the following statements is correct regarding detection risk and the audit risk model? OA. The two components of detection risk are test of details risk and inherent risk. B. Detection risk is equal to risk of material misstatement divided by audit risk. OC. There is an inverse relationship between the risk of material misstatement and detection risk. OD. There is a direct relationship between control risk and detection risk.arrow_forward
- Which of the following management assertions is an auditor most likely testing if the audit objective states that all inventory on hand is reflected in the ending inventory balance?a. The entity has rights to the inventory.b. Inventory is properly valued.c. Inventory is properly presented in the financial statements.d. Inventory is completearrow_forwardExplain whether or not analytical review procedures wouldbe sufficient for the audit of the inventory.arrow_forwardDescribe the methodology fordesigning tests of details ofbalances using the audit riskmodel.arrow_forward
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