Audit Purpose and Misstatements

The purpose of an audit is to enhance the degree of ______ in financial statements.

A material ______ in financial statements includes an error in amount, classification, presentation, or disclosure.

Risk ______ involves identifying and assessing the risks of material misstatements in financial statements.

Auditors gather information about the ______ and its environment to understand the risks of material misstatements.

The goal of an audit is to express an ______ that the financial statements are prepared in accordance with an applicable financial reporting framework.

Auditors perform ______ procedures to gather information about the entity and its environment.

Risk ______ is important because it helps auditors to identify and assess the risks of material misstatements.

Auditors assess the ______ of material misstatements at the financial statement ______.

The auditor is required to identify and assess the risks of _______________ misstatement:

The auditor identifies risks at the _______________ statement level and at the assertion level:

The auditor gathers information about the _______________ and its environment:

The auditor identifies and assesses risks of _______________ misstatements:

Assurance engagement _______________, including audit risk, is one such kind.

The risk of material _______________ can be decomposed into inherent risk and control risk.

The auditor considers whether the risks are of a magnitude that could result in a _______________ misstatement of the financial statements:

The auditor considers the likelihood that the risks could result in a _______________ misstatement of the financial statements:

ISA 200 states that inherent risk and control risk are considered at the _______________ level.

The auditor considers the inherent risk and control risk at the overall _______________ statement level.

The auditor performs _______________ assessment procedures to gather information:

The auditor relates risks to what can go wrong at the _______________ level:

The risk at the overall financial statement level often relates to an entity's _______________ environment.

Inherent risk and control risk should exist at the entity's _______________ environment.

Audit risk is a type of _______________ engagement risk.

The risk of material misstatement can be further broken down into _______________ risk and control risk.

ISA 315 requires the auditor to obtain an understanding of the entity's selection and application of ______ policies

The auditor should investigate a company's ______ position

ISA 315 requires the auditor to obtain an understanding of the entity's ______ and strategies

Risks of material misstatement may be greater for significant ______ matters requiring accounting estimates or revenue recognition.

Business risk is defined as a risk resulting from significant ______, events, circumstances, actions or inactions

XYZ Company, a client, lacks sufficient ______ capital to continue operations.

Auditors may use a ______-oriented framework to understand the client's business risks

The first step in the strategy-oriented framework is to understand the client's ______ advantage

The client is very close to violating ______ covenants.

Misstatements or omissions are material if they could reasonably be expected to ______ the economic decisions of users.

The auditor should document the understanding of the client's ability to create ______ and generate future cash flows

The final step in the strategy-oriented framework is to compare reported financial results to ______ and design additional audit test work

Judgements about materiality are made in light of surrounding ______, and are affected by the size or nature of a misstatement.

Materiality is influenced by ______, nature, and circumstances.

The nature of an item is a ______ characteristic.

The materiality of an error depends upon the ______ of its occurrence.