Chapter 3 Homework

Chapter 3 Homework - ACC 450 Chapter 3 Laurie Maxwell 3.20...

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ACC 450 Chapter 3 Laurie Maxwell 3.20 The likelihood that material misstatements may have entered the accounting system and not been detected and corrected by the client’s internal control is referred to as a. Inherent risk. b. Control risk. c. Detection risk. d. Risk of material misstatement. 3.21 The risk of material misstatements is composed of which audit risk components? a. Inherent risk and control risk. b. Control risk and detection risk. c. Inherent risk and detection risk. d. Inherent risk, control risk, and detection risk. 3.22 Auditors are not responsible for accounting estimates with respect to a. Making the estimates. b. Determining the reasonableness of estimates. c. Determining that estimates are presented in conformity with GAAP. d. Determining that estimates are adequately disclosed in the financial statements. 3.23 Auditing standards do not require auditors of financial statements to a. Understand the nature of errors and frauds. b. Assess the risk of occurrence of errors and frauds. c. Design audits to provide reasonable assurance of detecting errors and frauds. d. Report all finding of errors and frauds to police authorities.
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Chapter 3 Laurie Maxwell 3.24 The risk that the auditors’ own procedures will lead to the decision that material misstatements do not exist in the financial statements when in fact such misstatements do exist is a. Audit risk. b. Inherent risk. c. Control risk. d. Detection risk. 3.25 Auditors are responsible for the quality of the work related to management and control of a. Inherent risk. b. Business risk. c. Control risk. d. Detection risk. 3.26 The auditors assessed a combined inherent risk and control risk at .50 and said they wanted to achieve a 0.05 risk of failing to express a correct opinion on financial statements that were materially misstated. What detection risk do the auditors plan to use for planning the remainder of the audit work? a.
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Chapter 3 Homework - ACC 450 Chapter 3 Laurie Maxwell 3.20...

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