chap 6 professional judgement

Question 1

the process of documenting helps the auditor to be more what?

Answer 1

objective and complete in assessing the reasoning used in reaching a judgment decision

Question 2

the starting point to an effective professinal judgment begins with ____ and defining the issue by carefully analyzing the situation and its potential effect on the audit

Answer 2

identifying

Question 3

once the issue is defined, the auditor seeks to understand what?

Answer 3

the relevant facts and available info concerning the issue

Question 4

the starting point to an effective professinal ____ begins with identifying and defining the issue by carefully analyzing the situation and its potential effect on the audit

Answer 4

judgment

Question 5

what are the 4 most likely judgement tendencies, traps, or biases that may affect the decision making process of auditors?

Answer 5

1. confirmation - more weight on info consistent with inital beliefs or preferences 2. overconfidence- overestimate ones own abilities to perform tasks or make accurate assessments of risks or other judgments and decisions 3. anchoring- the tendency to make assessments by starting from an initial value and then adjusting insufficiently away from that initial value 4. availability- tendency to consider info that is more easily retrievable or whats easily assessible as being more liekly or more relevant

Question 6

what is an example of trying to understand relevant facts and availb info concerning an issue?

Answer 6

obtaining facts and infor about key inputs and assumptions to a transaction, event, or situation through discussions with client personnel who are knowledgeable about the situation

Question 7

the starting point to an effective professinal judgment begins with ?

Answer 7

identifying and defining the issue by carefully analyzing the situation and its potential effect on the audit

Question 8

when identifying and defining the issue, the auditor will consider what 4 aspects of the issue?

Answer 8

1. the impact of the issue on the FSs 2. the level of complexity and uncertainty surrounding the issue 3. whether there are any related issues that should be considered 4. the impact of the issue on planned audit procedures

Question 9

the starting point to an effective professinal judgment begins with identifying and defining the issue by carefully analyzing the situation and its potential effect on the ____

Answer 9

audit

Question 10

the starting point to an effective professinal judgment begins with identifying and ____ the issue by carefully analyzing the situation and its potential effect on the audit

Answer 10

defining

Question 11

the starting point to an effective professinal judgment begins with identifying and defining the ____ by carefully analyzing the situation and its potential effect on the audit

Answer 11

issue

Question 12

as more is learned about the facts and circumstances surrounding the issue, the auditor may determine that who is needed to make the judgement?

Answer 12

subject matter experts

Question 13

What 4 factors might an auditor consider while doing the analysis and identify potential alternatives phase of professional judgement?

Answer 13

1. whether she understands the form and substance of the transaction or event 2. whether the relevant authoritative literature has been applied consistently by the client to similar situations 3. whether the auditor has been able to corroborate the facts and assumptions that are important to the analysis 4. whether the auditor has identified any discrepancies or inconsistencies in the facts and info obtained.

Question 14

what is the strategy to avoid or mitigate the tendency for overconfidence bias? (2)

Answer 14

1. challenge opinion and experts 2. challenge underlying assumptions

Question 15

What are the 5 key elements of a professional judgment process?

Answer 15

1. Identify and Define the Issue 2. gather the facts and info and identify relevant literature 3. perform the analysis and identify potential alternatives 4. Make the decision 5. Review and complete the documentation and rationale for the conclusion

Question 16

what is the strategy to avoid or mitigate the tendency for anchoring bias? (2)

Answer 16

1. solicit input from others 2. consider management bias, inluding potential for fraud and material misstatements

Question 17

to evaluate the effect of the issue on the audit of the FSs, the auditor should consider what standards and rules relevant to the issue?

Answer 17

accounting and auditing standards and rules

Question 18

T/F Professional judgment isn’t part of professional skepticism

Answer 18

F

Question 19

what is the strategy to avoid or mitigate the tendency for confirmation bias? ()2)

Answer 19

1. make the opposing case and consider alternative explanations. 2. consider potentially disconfirming or conflicting info

Question 20

the starting point to an effective professinal judgment begins with identifying and defining the issue by carefully analyzing the _____ and its potential effect on the audit

Answer 20

situation

Question 21

what is the strategy to avoid or mitigate the tendency for availability bias? (3)

Answer 21

1. consider why something comes to mind 2. obtain and consider objective data 3. consult with others and make the opposing case

Question 22

AFter making the decision, the auditor should step back and do what?

Answer 22

evaulate the judgment process to determine that all of the key activities in the judgment process have been appropriately performed

Question 23

as the auditor articulates in written form the rationale of his or her judgment, the auditor may find that the reasoning appears faulty or incomplete and therefore is not persuasive. this should direct the auditor to do what?

Answer 23

evaluate whcih aspects of the analysis and judgment process may warrant further consideration .

Question 24

when gathering facts and info, the auditor should be alert for what?

Answer 24

other info either confirms or contradicts facts and info as well as evaluating the sources of that info

Question 25

the starting point to an effective professinal judgment begins with identifying and defining the issue by ?

Answer 25

carefully analyzing the situation and its potential effect on the audit

Question 26

the starting point to an effective professinal judgment begins with identifying and defining the issue by carefully _____ the situation and its potential effect on the audit

Answer 26

analyzing