Question

Risk response at the financial statement level is affected by _______. A the internal auditor’s system...

Risk response at the financial statement level is affected by _______.

A the internal auditor’s system of internal control

B the auditor’s understanding of the entity’s control environment and the assessed risk of material misstatement due to fraud

C the auditor’s understanding of the auditor's control environment and the assessed risk of material misstatement due to fraud

D the prior auditor's current assessment of audit risk

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The answer to the question is option B the auditor’s understanding of the entity’s control environment and the assessed risk of material misstatement due to fraud

Explanation : The risk level is affected by how the auditor understands the control environment of the firm, how the controls work and how reliant are the controls. Also, auditors assess the risk of material misstatement of each account balance and figure out what the risk response should be. Certain parameters are set and assigned to come to this conclusion.

In case of any query/clarification please leave a comment below, if the answer was helpful please leave a thumbs up, Thanks!

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
An auditor’s response to the assessment of the risks of material misstatement due to fraud takes...
An auditor’s response to the assessment of the risks of material misstatement due to fraud takes various forms. A response with an overall effect on the conduct of the audit is to A. Change the timing or extent of auditing procedures. B. Perform a retrospective review of significant accounting estimates. C. Consider whether management’s applications of accounting principles indicates a bias. D. Change the nature of auditing procedures.
A financial statement audit is designed to Provide assurance on internal control and to identify significant...
A financial statement audit is designed to Provide assurance on internal control and to identify significant deficiencies and material weaknesses. Obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to fraud or error. Detect error or fraud in the financial statements, regardless of whether or not the error or fraud is material. Obtain absolute assurance on the financial statements and express an opinion on the financial statements.
1. Which of the following best describes the reason why independent auditors report on financial statements?...
1. Which of the following best describes the reason why independent auditors report on financial statements? A management fraud may exist and it is more likely to be detected by independent auditors. An audit provides credibility to the financial statements. A misstatement of account balances may exist and it is generally corrected as the result of the independent auditors' work. Poorly designed internal controls may be present. 2. Audits of financial statements are designed to obtain reasonable assurance of detecting...
19.   Under to PSA 260, those matters that arise from the audit of financial statements and...
19.   Under to PSA 260, those matters that arise from the audit of financial statements and in the opinion of the auditor, are both important and relevant to those charged with governance in overseeing the financial reporting and disclosure process are called a.   Audit matters of governance interest b.   Significant audit matters c.   Auditor findings d.   Material misstatement in the financial statements 20.   Audit matters of governance interest to be communicated to those charged with governance ordinarily include a.   Audit...
1. Which of the following conditions justifies an auditor’s decision of raising the materiality level? a.  ...
1. Which of the following conditions justifies an auditor’s decision of raising the materiality level? a.   Internal control over cash receipts is excellent. b.   Application of analytical procedures reveals a significant increase in sales revenue in December, the last month of the fiscal year. c.   Internal control over shipping, billing, and recording of sales revenue is weak. d.   Study of the business reveals that the client recently acquired a new company in an unrelated industry. 2. The overall objectives of...
3.              Which of the following statements about understanding internal control is not true:                a. T
3.              Which of the following statements about understanding internal control is not true:                a. The auditor uses the knowledge of the system of internal control to design further audit procedures to collect evidence.                b. In the presence of a strong system of internal control, the auditor may choose to collect less evidence about transactions or balances.                c. In the audit of a private company, it is necessary to express an opinion on the system of internal control...
ADVANCED AUDIT Part A. Multiple Choice 1. Professional skepticism is: Select one: Select one: a. Necessary...
ADVANCED AUDIT Part A. Multiple Choice 1. Professional skepticism is: Select one: Select one: a. Necessary for a quality control system b. Adherence to the professional code of ethics c. An attitude that includes a questioning mind, being alert to conditions which may indicate possible misstatement due to error or fraud, and a critical assessment of audit evidence. d. The application of relevant training, knowledge and experience, within the context provided by auditing, accounting and ethical standards, in making informed...
20) Which of the following is the best reason for management to emphasize fraud prevention and...
20) Which of the following is the best reason for management to emphasize fraud prevention and deterrence?         A) The AICPA requires management to implement a fraud prevention program. B) It is often more effective and economical for companies to focus on fraud prevention and deterrence rather than on fraud detection. C) Collusion is impossible to detect. D) All of the above are equally valid reasons. 21) Who is responsible for setting the "tone at the top"? A) SEC                                 B)...
When there is a significant risk that an account will be misstated and the client's system...
When there is a significant risk that an account will be misstated and the client's system of internal controls is not considered effective at reducing that risk: more high quality evidence is gathered when conducting substantive tests. detection risk is set as low. detection risk is set as high. none of the above. Which of these would be a reason for adopting a predominantly substantive approach? Accounts are affected by more than one transaction class. Detection risk has been assessed...
After obtaining an understanding of the company’s internal control system, an auditor may decide to set...
After obtaining an understanding of the company’s internal control system, an auditor may decide to set control risk at the maximum level (i.e. take a substantive approach) for some assertions because he a. Believes the internal controls are unlikely to be effective. b. Determines that the pertinent internal control components are not well documented. c. Performs tests of controls to restrict detection risk to an acceptable level. d. Identifies internal controls that are likely to prevent material misstatements.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT