Podcast
Questions and Answers
What does an auditor consider when making a preliminary estimate of materiality for audit purposes?
What does an auditor consider when making a preliminary estimate of materiality for audit purposes?
- Unknown misstatements only
- Quantitative factors only
- Known misstatements, likely misstatements, and potential undetected misstatements (correct)
- Materiality for income statement only
Why does an auditor normally estimate a single amount for materiality?
Why does an auditor normally estimate a single amount for materiality?
- To decrease the audit risk
- Misstatements usually affect both balance sheet and income statement (correct)
- To prioritize income statement over balance sheet
- To simplify the audit process
What does an auditor need to consider in addition to quantitative assessment when assessing materiality?
What does an auditor need to consider in addition to quantitative assessment when assessing materiality?
- Qualitative factors (correct)
- Only known misstatements
- Historical data only
- Pervasive misstatements
What is the relationship between audit risk and materiality?
What is the relationship between audit risk and materiality?
Why does an auditor set a lower materiality threshold for accounts with higher audit risk?
Why does an auditor set a lower materiality threshold for accounts with higher audit risk?
What is the purpose of understanding the audit entity in audit planning according to ISA 315?
What is the purpose of understanding the audit entity in audit planning according to ISA 315?
Which of the following is NOT a way to gain understanding of the audit entity and its environment as per ISA 315?
Which of the following is NOT a way to gain understanding of the audit entity and its environment as per ISA 315?
Which of the following is NOT a characteristic of significant risks according to audit planning standards?
Which of the following is NOT a characteristic of significant risks according to audit planning standards?
What is a part of the auditor's response to assessed risk as per ISA 330?
What is a part of the auditor's response to assessed risk as per ISA 330?
How does an auditor use materiality according to ISA 320?
How does an auditor use materiality according to ISA 320?
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