Mastering Audit Planning

True or false: The planning process starts once the engagement letter has been signed?

True or false: General controls and application controls are reviewed during the audit planning process?

True or false: The auditor may assess control risk at the maximum level for all assertions?

True or false: The maximum control risk refers to the lowest probability of a material misstatement being prevented or detected by the entity's internal control structure?

True or false: Test of Controls focuses on both the design and operation aspects of the internal control structure?

True or false: Test of Control is performed to determine whether a control is working?

True or false: Inquiries of client personnel is one of the procedures in Test of Control?

True or false: The auditor does not evaluate the test results during the Test of Control phase?

True or false: The degree of reliance on controls is determined during the Test of Control phase?

True or false: Test of Control procedures involve the inspection of documents and records?

True or false: The TOC result is the Control Risk (CR) assessment.

True or false: The auditor should perform TOC if the CR preliminary assessment is below the maximum level.

True or false: The auditor is not required to perform TOC if the CR preliminary assessment is at the maximum level.

True or false: Substantive Testing Phase is the most expensive phase of the audit.

True or false: In Substantive Testing Phase, the auditor aims to substantiate management's assertion regarding existence or occurrence of specific assets and liabilities.

True or false: The NTE (Nature, Timing, and Extent) of Substantive Testing depends on the auditor's assessed level of control risk.

True or false: If the control risk is at the minimum level, the auditor can have a higher acceptable detection risk.

True or false: If the control risk is at the maximum level, the auditor should have a lower acceptable detection risk.

True or false: A disclaimer of opinion means that the auditor is unable to reach an opinion.

True or false: An unqualified opinion means that the auditor believes that no material losses or account misstatements have occurred.