Ch 3-5 Gleim

Question 1

to get an understanding of a continuing client, an auditor most likely would:

Answer 1

read internal audit reports

Question 2

the acceptable level of detection risk is inversely related to the:

Answer 2

assurance provided by substantive procedures

Question 3

as the acceptable level of audit risk decreases, an auditor may:

Answer 3

postpone the planned timing of substantive tests from interim dates to the year end

Question 4

which audit risk components may be assessed in nonquantitative terms?

Answer 4

control risk
detection risk
inherent risk

Question 5

what is the purpose of assessing the RMM?

Answer 5

it affects the level of detection risk that the auditor may accept

Question 6

a CPA’s firm quality control procedures before accepting a client include:

Answer 6

consideration of the business reputation of the client’s management

Question 7

what procedure is the auditor likely to do after accepting an engagement?

Answer 7

tour the facilities

Question 8

in every audit, what must be identified as a potential risk of material misstatement due to fraud?

Answer 8

management override of controls

Question 9

when understanding the internal control system of a nonissuer, an auditor does not need to:

Answer 9

obtain knowledge about the operating effectiveness of the system of internal control

Question 10

the existence of audit risk is recognized by the statement in the auditor’s report that the auditor:

Answer 10

obtains reasonable assurance about whether the financial statements are free or material misstatement