Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Textbook Question
Chapter 9, Problem 3RQ
Provide two examples of factors that might increase the risk of material misstatement at the overall financial statement level.
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6. Inherent risk is the susceptibility of an account balance, class of transactions or disclosure to material misstatement given inherent and environmental characteristics, but without regard to internal control.
Required:Identify and discuss five (5) factors that affect inherent risk at the financial report level.
Identify three different categories of fraud risk factors. Next, for each category, what are some ofthe conditions that can help contribute to a higher likelihood of financial statement fraud?
Which is not a Risk Assessment Procedure?
a.
Ratio Analysis
b.
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c.
Account Receivable confirmations
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Inspection of Documents
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Inquiry of Internal Auditors
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
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- The risk that a client's financial statements are susceptible to material misstatements is a. control risk b. inherent risk c. audit risk d. none of the abovearrow_forwardBelow are events, for each event, identify the type of risk the event entails, classify your identified risk as either systematic or unsystematic risk; Economic distress Mismanagement Technological causes Working capital problems Fraudulent management.arrow_forwardThe risk of a material misstatement in the financial statements arising due to error or omission as a result of factors other than the failure of controls is called: a. Control Risk b. Inherent Risk c. Audit Risk d. Detection Riskarrow_forward
- Economic distress and mismanagement are events, identify the types of risk each of them entails and classify your identified risk as either systematic or unsystematic risk.arrow_forwardWhat are the five types of tests auditors use to determine whether financial statements are fairly stated? Identify which tests are performed to reduce planned detection risk.arrow_forwardProvide the key factor auditors will have to review when deciding on the inherent risk within the accounting system.arrow_forward
- An audit can have significant effect on A. Financial risk B. Business risk C. Information risk D. Solvency riskarrow_forwardOnce risks are identified, auditors assess the risk of material misstatement at the _______ level for these significant classes of transactions and account balances. A. disclosure B. financial statement C. relevant assertion level D. accountarrow_forwardProvide two inherent risk factors in the revenue cycle and identify the accounts that are likely to be overstated or understated and explain why.arrow_forward
- An amount less than materiality that is set to reduce the likelihood that the aggregate amount of misstatements not exceed materiality for the financial statements as a whole is known as O qualitative materiality. specific materiality. O quantitative materiality. O performance materiality.arrow_forwardDuring financial statement audit, auditors seek to restrict which type of risk? Control risk, Detection risk, Inherent risk, or Account riskarrow_forwardDefine and give examples of off-balance-sheet information. Why should auditors be concerned with such items?arrow_forward
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