Podcast
Questions and Answers
What is the potential effect of an auditor deciding that there is a higher inherent risk for an account?
What is the potential effect of an auditor deciding that there is a higher inherent risk for an account?
- Less audit evidence will be required for that account
- More audit evidence will be required for that account (correct)
- The audit risk will be decreased
- The client will be refused for the audit
What happens to the cost of conducting an audit when acceptable audit risk is decreased?
What happens to the cost of conducting an audit when acceptable audit risk is decreased?
- The cost of conducting an audit increases (correct)
- The cost of conducting an audit is unknown
- The cost of conducting an audit decreases
- The cost of conducting an audit remains the same
Why do some CPA firms refuse new clients in certain high-risk industries?
Why do some CPA firms refuse new clients in certain high-risk industries?
- Due to the complexity of the industry
- Due to the lack of potential revenue
- Due to the high risk of material misstatement (correct)
- Due to the low risk of material misstatement
What do audit firms consider when making client acceptance decisions?
What do audit firms consider when making client acceptance decisions?
Why do auditors assess inherent risk as high for related parties and related-party transactions?
Why do auditors assess inherent risk as high for related parties and related-party transactions?
Why are transactions with related parties required to be disclosed in the financial statements?
Why are transactions with related parties required to be disclosed in the financial statements?
What is the primary reason why auditors consider inherent risk as high for certain industries?
What is the primary reason why auditors consider inherent risk as high for certain industries?
What is the main consideration for audit firms when deciding to accept a new client?
What is the main consideration for audit firms when deciding to accept a new client?
Why do auditors assess inherent risk as high for related-party transactions?
Why do auditors assess inherent risk as high for related-party transactions?
What is the main purpose of assessing inherent risk?
What is the main purpose of assessing inherent risk?
