Chapter 2-Part 2

Question 1

Level of performance that would be exercised by reasonable auditors in similar circumstances

Answer 1

Due Care

Question 1

GAAS may not detect all material misstatement and auditors are not guantors to fairness of entity’s financial statements

Answer 1

Reasonable Assurance

Question 2

probability that a material misstatement, either an error or fraud that will not be prevented or detected on a timely basis by entity’s control

Answer 2

Control Risk

Question 3

The detailed audit and analytical procedures designed to detect material misstatements in account balances and footnote disclosures

Answer 3

Substantive Procedures

Question 4

The likelihood that the auditors’ substantive procedures will fail to detect a material misstatement that exists within an account balance or class of transactions.

Answer 4

Detection Risk

Question 5

The policies and procedures implemented by a firm to provide with reasonable assurance that the firm and its personnel

(1) comply with professional standards and applicable regulatory and legal requirements and

(2) issue reports that are appropriate in the circumstances.

Answer 5

System of Quality Control

Question 6

1. Leadership Responsibilities
2. Relevant Ethical Requirement
3. Acceptance and continuance of client relationship and specific engagements
4. Human Resource
5. Engagement Performance
6. Monitoring

Answer 6

Six Elements of System of Quality Control