Week 1

Question 1

True

Answer 1

The financial statements are correct

Question 2

Fair

Answer 2

All relevant information is included

Question 3

Reasonable assurance

Answer 3

High level of assurance, but not absolute

Question 4

Material misstatement

Answer 4

If, individually or aggregate, they could influence the economic decisions of users taken on basis of the financial statements

Question 5

Audit evidence

Answer 5

All information gathered that the auditor bases his opinion on

Question 6

Risk assessment procedures

Answer 6

Audit procedures to obtain an understanding of accounting and internal control systems

Question 7

Business risk

Answer 7

Risks that could adversely affect the entity’s ability to achieve its objectives and execute its strategies

Question 8

Audit risk

Answer 8

Risk that the auditor gives an unappropriate audit opinion when the financial statements are materially misstated

Question 9

Inherent risk

Answer 9

Risk that occur assuming there were no internal controls

Question 10

Control risk

Answer 10

Risk that a material misstatement could occur and will not be prevented or detected and corrected on a timely basis by internal controls

Question 11

Detection risk

Answer 11

Risk that an auditor’s procedures will not detect a misstatement that exists that could be material

Question 12

Risk of material misstatement

Answer 12

Combination of inherent and control risk

Question 13

Significant risk

Answer 13

Audit risks that require special consideration. These are generally related to judgemental matters and significant non-routine transactions

Question 14

Audit

Answer 14

Systematic process of objectively obtaining evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between these assertions and established criteria, and communicating the results to interested users