Audit Procedures and Evidence
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Questions and Answers

What responds to risk assessment for each significant account and assertion?

  • RMM
  • Nature & Timing (correct)
  • Audit Risk Model
  • Extent

    • Which factor has an inverse relationship with Detection Risk (DR)?

  • Inherent Risk (IR)
  • Risk of Material Misstatement (RMM) (correct)
  • Extent
  • Control Risk (CR)

    • What happens to the amount of substantive testing required as the Risk of Material Misstatement (RMM) increases?

  • It is not affected
  • It remains the same
  • It decreases
  • It increases (correct)

    • In the Audit Risk Model, which factors make up the Risk of Material Misstatement (RMM)?

    <p>IR x CR</p> Signup and view all the answers

    What should the auditor do to obtain sufficient appropriate audit evidence?

    <p>Design and perform audit procedures</p> Signup and view all the answers

    What is the purpose of substantive audit procedures?

    <p>To detect material misstatements at the assertion level.</p> Signup and view all the answers

    Which assertion is related to the completeness assertion for transactions?

    <p>Cut-off</p> Signup and view all the answers

    What do tests of details aim to verify?

    <p>The correctness of transactions.</p> Signup and view all the answers

    Which assertion is related to the accuracy, valuation, and allocation for account balances?

    <p>Classification</p> Signup and view all the answers

    What is the main focus of risk assessment in relation to substantive audit procedures?

    <p>Determining the degree of focus for substantive procedures.</p> Signup and view all the answers

    In relation to substantive audit procedures, what is the purpose of vouching?

    <p>To trace transactions back to supporting documentation.</p> Signup and view all the answers

    What is the main focus of Analytical Procedures in auditing?

    <p>Finding underlying non-financial information</p> Signup and view all the answers

    When are Computer Assisted Audit Techniques (CAATS) and Automated Data Analysis (ADAs) more useful?

    <p>When internal controls are strong</p> Signup and view all the answers

    In auditing, what does CAS 540 require regarding the audit of estimates?

    <p>Test management's estimation process</p> Signup and view all the answers

    Why is it important for auditors to understand the client's business?

    <p>To interpret financial statement results better</p> Signup and view all the answers

    What is the purpose of documenting, interpreting, and concluding on audit results?

    <p>To distinguish between potential errors and fraud</p> Signup and view all the answers

    What is a key aspect of evaluating results for financial statement analysis?

    <p>Determining if misstatements are due to one-off events</p> Signup and view all the answers

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