Responding to the Assessed Risks of Material Misstatement

Question 1

What are the 3 elements of further audit procedures?

Answer 1

Nature, extent, and timing

Question 2

What does the nature of an audit procedure include?

Answer 2

Purpose and type

Question 3

What does the extent of audit procedures refer to?

Answer 3

Quantity to be performed

Question 4

When can audit tests be performed?

Answer 4

Interim date or at period end

Question 5

The auditor’s specific approach to identified risks at the relevant assertion level may consist of either?

Answer 5

A substantive approach or combined approach

Question 6

What does substantive approach consists of?

Answer 6

Only substantive procedures

Question 7

When does substantive approach occur?

Answer 7

When control risk is assessed at maximum

Question 8

Control risk is assessed at maximum because?

Answer 8

No effective controls, Implemented controls are assessed as ineffective, or it would not be efficient to test the operating effectiveness of controls

Question 9

What tests are used in a combined approach?

Answer 9

Tests of the operating effectiveness of controls and substantive procedures

Question 10

If controls are operating effectively, how much assurance will be required from substantive procedures?

Answer 10

Less assurance

Question 11

Tests of controls are generally required when?

Answer 11

Entity conducts its business using IT, highly automated processing with little or no manual intervention, or audit evidence is obtained in electronic form

Question 12

For all significant risks, the auditor should?

Answer 12

Evaluate the design of the entity’s related controls and determine whether the controls have been implemented and perform substantive procedures that are clearly linked and responsivve to the risk

Question 13

What procedures are used to detect material misstatements at the relevant assertion level?

Answer 13

Substantive procedures

Question 14

Substantive procedures are required for?

Answer 14

Material transaction class, account balance, or disclosure

Question 15

What are the 2 types of substantive procedures?

Answer 15

Tests of details and substantive analytical procedures

Question 16

In designing tests of details, the extent of substantive procedures generally refers to?

Answer 16

Sample size

Question 17

The results of further audit procedures may lead the auditor to?

Answer 17

Reassess the risks of material misstatement

Question 18

When there is a change in the assessed level of risk, the auditor should modify?

Answer 18

Planned audit procedures

Question 19

What does the auditor use to evaluate the sufficiency and appropriateness of audit evidence?

Answer 19

Judgment

Question 20

PCAOB standards state that the following factors are relevant to the conclusion that sufficient appropriate evidence has been obtained?

Answer 20

Significance of uncorrected misstatements, results of audit procedures performed, auditor’s risk assessment, and appropriateness of the audit evidence obtained

Question 21

Documentation requirements for audit procedures?

Answer 21

Overall response, nature, extent, and timing, linkage of those audit procedures, results of audit procedures, and conclusions

Question 22

What does vouch test for?

Answer 22

Existence, support, and occurrence

Question 23

What does trace test for?

Answer 23

Completeness and coverage