Chap003 - Chapter 03 - Risk Assessment and Materiality...

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Chapter 03 - Risk Assessment and Materiality Chapter 3 Risk Assessment and Materiality Learning Objectives Review Questions Multiple- Choice Questions Problems Discussion Cases Internet Assignments/ ACL Problems/ EarthWear Mini-Cases (EWMC) LO 1: Understand the concept of audit risk. 1,2 13,14,15 23,24,25, 26,27 LO 2: Learn the form and components of the audit risk model. 2 15 23,24,25, 26,27 LO 3: Understand how to use the audit risk model. 22 23,24,25, 26,27,28 LO 4: Learn the limitations of the audit risk model. 3 LO 5 : Understand the auditor’s risk assessment process. 4,5,6,7 17,18, 20 28,29,30 32 34 EWMC LO 6 : Know the factors that determine the auditor’s assessment of the risk of material misstatement. 5,6,7 16,17,18, 19,20 28,29,30 32 34 LO 7 : Learn how to respond to the results of the risk assessments. 30 34 LO 8: Learn how to evaluate the results of the audit tests. 16, 19 30 LO 9: Understand the documentation requirements for risk assessments and responses. 29 LO 10: Learn the auditor’s communication requirements to management, the audit committee, and others. LO 11: Understand the concept of materiality. 8,11,12 13 23 33 ACL EWMC LO 12 :Know the steps to applying materiality in an audit. 8,9,10 21,22 31 33 LO 13: Apply the materiality steps to an example (EarthWear). 21 31 33 EWMC END OF CHAPTER MATERIALS COMPARISION CHART 3-1
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Chapter 03 - Risk Assessment and Materiality Number in 7 th edition Compariso n Number in 6 th edition 3-1 Unchanged 3-1 3-2 Unchanged 3-2 3-3 Unchanged 3-3 3-4 Unchanged 3-4 3-5 Unchanged 3-5 3-6 Unchanged 3-6 3-7 Unchanged 3-7 3-8 Unchanged 3-8 3-9 Unchanged 3-9 3-10 Unchanged 3-10 3-11 Unchanged 3-11 3-12 Unchanged 3-12 3-13 Modified 3-13 3-14 Unchanged 3-14 3-15 Unchanged 3-15 3-16 Revised 3-16 3-17 Unchanged 3-17 3-18 Unchanged 3-18 3-19 Unchanged 3-19 3-20 Unchanged 3-20 3-21 Revised 3-21 3-22 Unchanged 3-22 3-23 Unchanged 3-23 3-24 Unchanged 3-24 3-25 Revised 3-25 3-26 New 3-27 Unchanged 3-26 3-28 Revised 3-27 Deleted 3-28 3-29 New 3-30 New 3-31 Unchanged 3-29 Deleted 3-30 Deleted 3-31 3-32 New 3-33 New 3-34 Unchanged 3-32 3-2
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Chapter 03 - Risk Assessment and Materiality Chapter 3 introduces two of the basic auditing concepts: audit risk and materiality. It is helpful to the student’s understanding of these two concepts if the instructor relates them back to the wording used in the auditor’s report: Audit risk relates to “reasonable assurance.” Materiality relates to the financial statement presenting fairly, “in all material respects.” It is also important to discuss how audit risk and materiality impact the auditor’s evidence decisions. This includes planning the nature, extent, and timing of audit procedures and in evaluating the results of those procedures. [LO 1] Audit Risk
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This note was uploaded on 04/05/2011 for the course ACC 311 taught by Professor Hogwarts during the Spring '11 term at Michigan State University.

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Chap003 - Chapter 03 - Risk Assessment and Materiality...

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