Module 13

Question 1

audit risk

Answer 1

auditor gives an inappropriate opinion when financial statements are materially misstated
reduce risk to acceptably low level

Question 2

risk-based approach

Answer 2

focuses on areas most likely to contain material misstatement

Question 3

materiality

Answer 3

measure of significance
where a matter is material its misstatement or omission would impact users

Question 4

audit judgement

Answer 4

driven by competence, experience and the need to comply with standards

Question 5

inherent risk

Answer 5

material misstatement irrespective of related internal controls
ROMM

Question 6

control risk

Answer 6

entity’s controls will not prevent or detect a material misstatement on a timely basis
ROMM

Question 7

detection risk

Answer 7

auditors procedures will not detect material misstatement
SR and NSR

Question 8

sampling risk

Answer 8

does not give same conclusion as testing the whole population

Question 9

non-sampling risk

Answer 9

incorrect judgement made because results were incorrectly interpreted