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Unformatted text preview: Week four 9-21 (Objective 9-10 ) Explain the circumstances when the auditor should revise the components of the audit risk model and the effect of the revisions on planned detection risk and planned evidence. When identifying the risk of material misstatement, whether the financial statements are presented properly. If the auditor has any questions that the information provide or found was unacceptable. 9-22 (Objectives 9-1 , 9-2 ) The following questions deal with materiality. Choose the best response. • a. Which one of the following statements is correct concerning the concept of materiality? o (4) Materiality is a matter of professional judgment. • .b. The concept of materiality will be least important to the CPA in determining the o (4) effects of the CPA’s direct financial interest in a client upon the CPA’s independence. • c. In considering materiality for planning purposes, an auditor believes that misstatements aggregating $10,000 will have a material effect on an entity’s income statement, but that misstatements will have to aggregate $20,000 to materially affect the balance sheet. Ordinarily, it is appropriate to design audit procedures that are expected to detect misstatements that aggregate o (1) $10,000 9-23 (Objective 9-1 , 9-6 , 9-8 ) The following questions concern materiality and risk. Choose the best response. • a. Edison Corporation has a few large accounts receivable that total $1,400,000. Victor Corporation has a great number of small accounts receivable that also total $1,400,000. The importance of a misstatement in any one account is therefore greater for Edison than for Victor. This is an example of the auditor’s concept of o (1) materiality. • b. Which of the following elements ultimately determines the specific auditing procedures that are necessary in the circumstances to afford a reasonable basis for an opinion? o (1) Auditor judgment • c. Which of the following best describes the element of inherent risk that underlies the application of generally accepted auditing standards, specifically the standards of field work and reporting?...
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This note was uploaded on 10/28/2011 for the course AUDIT WK 4 audit taught by Professor Audit during the Spring '11 term at Keller Graduate School of Management.
- Spring '11