A3

Question 1

If an auditor’s risk assessment is based on the effective operation of controls, the auditor will likely

Answer 1

Identify specific IC that are likely to detect or prevent material misstatements.

Question 1

Auditors would consider situations that threaten financial stability or profitability, since such situations might provide an inventive to fraudulently misstate the FS. example is

Answer 1

The entity’s industry is experiencing declining customer demand

Question 2

What type of analysis provides direct and quantitative measures of the precision of expectation… it is also an advances statistical technique that often uses software?

Answer 2

Regression analysis

Question 3

Sampling used to estimate NUMERICAL measurements of a population

Answer 3

Variable Sampling

Question 4

Detection Risk

Answer 4

can be changed at the auditor’s discretion

Question 5

Control Risk & Inherit Risk

Answer 5

Exist independently of the FS Audit

Question 6

When determining sample size of TOC auditor should consider

Answer 6

Rate of Deviation, Allowable risk of assessing risk to low & Tolerable Deviation Rate

Question 7

Auditor’s risk assessment

Answer 7

Affects the nature, timing and extent of Audit procedures NOT the relevance of AUDIT Evidence

Question 8

Existence Assertion auditor works from…

Answer 8

Accounting records to supporting evidence.
encontre algo al auditar pero solo se si existe si busco evidencia

Question 9

Completes Assertion auditor works from…

Answer 9

Supporting Evidence to Acct Records
Como se que la evidencia esta completa? la busco en los records

Question 10

When control risk is assessed @ maximum level

Answer 10

Document Assessment
Auditor after documenting should make decisions to potentially perform + substantive testing

Question 11

Audit eveidence

Answer 11

The + effective IC structure, the + assurance it provides about the reliability of the accounting data and FS

Question 12

TOC example

Answer 12

Auditor interviews & observes appropriate personnel to determine segregation of Duties

Question 13

Auditor assesses control risk b/c?

Answer 13

Affects the level of detection risk that the auditor may accept.

Question 14

Primary objective of brainstorming is….

Answer 14

Assess the potential for material misstatement due to fraud

Question 15

Inherent Risk- auditor assesses which

Answer 15

Susceptibility of FS assertion to be materially misstated assuming there are no related controls.

Question 16

if acceptable level of detection risk increases auditor may change

Answer 16

Timing of substantive test from YE to INT.

As detection risk increase substantive decreases so by moving it from YE to INT=The assurance decreases

Question 17

Which ratio would an engagement partner most likely consider i the overall review stage of an audit?

Answer 17

Inventory Turnover=
COGS/avg. Inventory

Question 18

Precision (sampling results)

Answer 18

Auditors evaluation of sampling results by calculating the possible error in either direction

Question 19

Primary objective of probability proportional to size

Answer 19

To identify overstatement of error.

Question 20

TOC in issuer client

Answer 20

An auditor must obtain evidence that the controls are operating effectively during the entire period of reliance if the auditor plans to assess Control Risk at LESS than the Maximum.

Question 21

Providing + supervision during audit in response to assessed risk of RMM is example of

Answer 21

An overall response

Question 22

Auditor’s analytical procedures most likely would be facilitated if entity…

Answer 22

Uses standard cost system that produces variance reports…
The report caparison of budget will already be performed y es probable que management ya los analyso previamente y tiene respuestas para los cambios

Question 23

Primary objective of analytics @ review (final) stage is to….

Answer 23

Assist the auditor in evaluating the overall FS presentation.

Question 24

Primary objective of the FRAUD brainstorming

Answer 24

Assess the potential for material misstatement due to FRAUD

Acordarme si hablamos de FRAUD entonces el assessment es de FRAUD

Question 25

Response to an increase in risk of RMM in inventory will be to

Answer 25

Perform physical count on the last day of the current year

Question 26

When auditor assesses control risk too HIGHT ….most likely occurred because

Answer 26

Control risk based on the auditor’s sample is greater than the true operating effectiveness of the client’s control activity

Question 27

Auditor would consider confirming a LARGE complex sale when…

Answer 27

RMM (inherent risk & control risk) is HIGH

Question 28

PCAOB standards state that the following is not of relevance regarding audit evidence

Answer 28

Audit Risk assessment