Group 6 Internal Audit

1. The risk that the assertion contains material misstatements that, when aggregated with misstatements in other assertions, could make the entire financial statement smaterially misstated is?

• individua audit risk

• control risk

• detection risk

• inherent risk

2. Incremental risk is the increased risk that errors may not be detected at the balance sheet date because?

• inherent risk was assessed too low

• audit procedures were performed at an interim date

• annalytical procedures were not performed

3. Adequate planning of the audit work helps the auditor of accoplishing the following objectives, except?

• gathering of all corroborating audit evidence

• ensuring that appropriate attention is devoted to important areas of the audit

• the audit work is completed efficiently.

4. The extent of planning will vary according to any of the following, except?

• size of the audit client

• the assessed level of control risk

• the natural and complexity of the audit engagement

5. Which of the following is least likely considered by the auditor in developing the overall audit plan?

• relevant risk and materiality

• the general level of competence of audit assistants

• the involvement of the auditors in the audit of major component of financial statements

6. Which of the following is not considered by the CPA when he makes an overall audit plan?

• the content of the representation letters

• the information technology used by the client

• the nature and timing of reports or other communication with the entity that are expected under the engagement

7. Which of the following least likely affect the form and content of the overall audit plan?

• methodology and technology used by the auditor

• complexity of the audit engagement

• the entity’s form of business organization

8. The audit program should contain the following, except?

• set combined assessed level of inherent and control risk

• set of planned audit procedures

• audit objective

9. Which of the following will most likely help the auditor to identify and understand the events, transactions and practices of his audit client?

• understanding of accounting and internal control

• obtaining a sufficient knowledge of the business of his client

• obtaining a represention letter from the client managament

10. The auditor should have or obtain knowledge of the client’s business sufficient to

• have an overall evaluation of whether financial assertions are fairly presented in the financial statements

• identify and understand events, transactions and practices that may have effect on financial statements

• evaluate whether the financial statements are materially misstated