Key term

Question 1

Professional sceptism

Answer 1

• An attitude that includes a questioning mind
• being alert to conditions which may indicate possible misstatements
• due to fraud or error
• a critical assessment oof audit evidence

Question 2

Professional judgement

Answer 2

• Application of relevant training, knowledge and experience
• In making informed decisions about the courses of action that are appropriate
• in the circumstances of the audit engagement

Question 3

Audit risk

Answer 3

• the risk that auditor expresses an INAPPROPRIATE OPINION when the financial statements are MATERIALLY MISSTATED

Question 4

Inherent risk

Answer 4

• The susceptibility of an assertion about a class of transaction, account balances or disclosure to a misstatement that could be material, individually or when aggregated with other misstatements
• before consideration of any related internal control

Question 5

Control risk

Answer 5

• The risk that a material misstatement that could occur in an assertion about a class of transaction, account balances or disclosure
• And that could be material individually or when aggregated with other misstatements
• will not be prevented or detected and corrected on timely basis by the entity’s internal control

Question 6

Detection risk

Answer 6

• The risk that tge procedures performed by the auditor to reduces audit risk to an acceptably low level
• will not detect a misstatement that exists
• and that could be material, either individually or when aggregated with other misstatements

Question 7

Materiality

Answer 7

Information is material if its omission or mistatements could reasonably be expected to influence the economic decision of users taken on the basis of the financial statements

Question 8

Performance materiality

Answer 8

• The amount or amounts
• Set by the auditor
• Lower than the materiality level or levels
• For particular classes of transaction, account balances or disclosures

Question 9

Analytical Procedures

Answer 9

• Analysis of relationship
• To identify inconsistencies & unexpected relationship

Question 10

Fraud

Answer 10

• Intentional act
• By one or more individuals among management, TCWG, employees, or 3rd parties
• Involving the use of deception
• To obtain an unjust or illegal advantage

Question 11

Fraud risk factors

Answer 11

• Events or conditions
• Indicate an incentive or pressure to commit fraud
• Or provide an oppotunity to commit fraud