A3 - Assessing the Risks of Material Misstatement

Question 1

What are the six assessments of material misstatement risk?

Answer 1

IM A CPA
Internal control, environment and entity understanding
Material misstatement risk assessment
Assessed level of risk response
Control testing
Perform substantive tests
Audit evidence evaluation - appropriateness and sufficiency

Question 2

On what should analytical procedures used in planning an audit focus?

Answer 2

Enhancing the auditor’s understanding of the client’s business

Question 3

T/F: Comparing recorded financial information with anticipated results from budgets and forecasts is not part of the audit planning process

Answer 3

False; it is a necessary part of analytical procedures used during the planning stage

Question 4

T/F: The auditor should always document his or her understanding of internal control

Answer 4

True