100%(9)9 out of 9 people found this document helpful
This preview shows page 18 - 20 out of 26 pages.
Answer: BAnswer: C17) When assessing risk, it is important to remember thatA) for acceptable audit risk, the SEC decides the risk the CPA firm should take for public clients.B) inherent risk can be changed by the auditor.C) detection risk can only be determined after audit risk, inherent risk, and control risk are determined.D) control risk is determined by company management since they are responsible for internal control.Answer: C18) Which of the following is a correct relationship?A) Acceptable audit risk and planned detection risk have an inverse relationship.B) Control risk and planned detection risk have a direct relationship.C) Planned detection risk and inherent risk have an inverse relationship.D) All of the above are correct relationships.Answer: C16) The risk of material misstatement refers toA) control risk and acceptable audit risk.B) inherent risk.C) the combination of inherent risk and control risk.D) inherent risk and audit risk.22) Why do auditors use the audit risk model when planning an audit?Answer: The audit risk model is used primarily for planning purposes in deciding how much evidence to accumulate in each cycle. The auditor sets an acceptable level of audit risk, (AAR) assesses inherent risk (IR) and control risk (CR), and then uses the following audit risk model to determine an appropriate level of planned detection risk (PDR):PDR=Analytical procedures 1) Which of the following is a correct statement regarding analytical procedures?
2) Which of the following would notbe classified as an analytical procedure?3) When performing planning analytical procedures for a client the auditor detected that the gross profit percentage had declined by 50% from the previous year to the year currently under audit. The auditor should