Exercise

It is the probability that the auditor will render unqualified opinion on financial statements that are, in fact, are materially misstated.

• Audit Risk

• Internal Control

• Management Assertions

• Audit Planning

Internal Controls are the mechanisms, rules, and procedures implemented by the company to ensure financial and accounting information integrity, promote accountability, and prevent

fraud.

• TRUE

• FALSE

The audit risk formula/model is

The relationship between test of controls and substantive test is direct. It means that the stronger the internal control, the more substantive testing the auditor must do.

• TRUE

• FALSE

Which of the following is the correct order of the phases of audit?

• 1. Audit Planning

  2. Substantive Testing

  3. Test of Control

• 1. Audit Planning

  2. Test of Control

  3. Substantive Testing

• 1. Test of Control

  2. Audit Planning

  3. Substantive Testing

A systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and establishing criteria and communicating the results to interested users.

• Accounting

• Consulting

• Auditing

• Planning

Which of the following is not a component of Internal Control?

• Control Environment

• Monitoring

• Risk Assessment

• Audit Planning

Which of the following is not one of the three major control types?

• Deterrent

• Preventive

• Detective

• Corrective

Audit procedures may be performed:

• throughout the period being audited with emphasis on the transactions near the end.

• shortly after the close of the period being audited.

• early in the accounting period being audited.

• during all three of the above periods.

When auditors use documents to support recorded transactions, the process is often called:

• physical examination.

• confirmation

• vouching.

• inquiry.