Audit Quiz - Chapter 9

Question 1

Materiality is an absolute concept.

Answer 1

False

Question 2

Materiality is referenced in audited financial statements.

Answer 2

True

Question 3

Materiality employs the reasonable person’s view concept.

Answer 3

True

Question 4

Materiality is solely quantitative driven.

Answer 4

False

Question 5

Materiality Thresholds address the minimum amount of misstatement the auditor is willing to accept.

Answer 5

False

Question 6

Generally, qualitative factors are just as important as quantitative factors when assessing materiality.

Answer 6

True

Question 7

GAAS established specific materiality guidance.

Answer 7

False

Question 8

Preliminary judgement about materiality requires a considerable amount of professional wisdom.

Answer 8

True

Question 9

Preliminary judgement about materiality that yields a low dollar amount requires less evidence accumulation.

Answer 9

False

Question 10

Performance materiality levels established are generally higher than preliminary judgement about materiality thresholds.

Answer 10

False

Question 11

Performance materiality limits are additional tools employed to reasonably ensure that undetected and uncorrected misstatements are below audit acceptable risk.

Answer 11

True

Question 12

Auditors accept some degree of risks when performing audits.

Answer 12

True

Question 13

The Audit Risk Model ultimately focuses on Acceptable Audit Risk.

Answer 13

False

Question 14

Inherent Risk and Control Risk have an indirect effect on Planned Detection Risk.

Answer 14

True

Question 15

Inherent Risk and Control Risk have an indirect effect on evidence gathering.

Answer 15

False

Question 16

Acceptable Audit Risk and Planned Detection Risk both have a inverse effect on evidence gathering.

Answer 16

True

Question 17

If a given audit cycle that has a Low Inherent Risk, Low Control Risk, and Medium Acceptable Audit Risk, the Planned Detection Risk is most likely to be Low also.

Answer 17

False

Question 18

Engagement Risk and Client Business Risk are very closely related.

Answer 18

True

Question 19

Performance Materiality has a direct relationship with Planned Audit Evidence gathering.

Answer 19

False

Question 20

Auditors may not revise its Planned Detection Risk once the substantive tests have started.

Answer 20

False