PRE-ENGAGEMENT AND AUDIT PLANNING

The fair presentation of the financial statements in accordance with the financial reporting standards is the responsibility of the

• internal auditor

• external auditor

• company's management

• Securities and Exchange Commission

The auditor communicates the results of his or her work through the medium of the

• engagement letter

• management letter

• audit report

• financial statement

The risk that the auditor may express an incorrect opinion on the financial statements is called

• inherent risk

• control risk

• detection risk

• audit risk

The susceptibility of an account to misstatements assuming no internal control is referred to as the

• inherent risk

• control risk

• detection risk

• audit risk

For a particular assertion, control risk is the risk that

• a material misstatements will occur in the accounting process

• controls will not detect a material misstatement

• audit procedures will not detect a material misstatement that occurs

• the prescribed control procedures will not be applied uniformly

For a particular assertion, control risk is the risk that

• a material misstatements will occur in the accounting process

• controls will not detect a material misstatement

• audit procedures will not detect a material misstatement that occurs

• the prescribed control procedures will not be applied uniformly

Which of the following statements about independent financial statement audit is incorrect?

• The term "scope of the audit" refers to audit procedures deemed necessary to achieve the objective of the audit

• The auditor's opinion enhances the credibility of the financial statements

• the phrase used to express the auditor's opinion is "present fairly in all material respects"

• the risk that the auditor will fail to uncover material misstatement is eliminated when the auditor complies with PSAs

In assessing client's integrity, prior year audit experience is not beneficial to an auditor because management may have different attitudes in subsequent periods

• TRUE

• FALSE

The auditor may decide not to accept an engagement if management disregards its responsibility to maintain adequate internal control environment.

• TRUE

• FALSE

Risk assessment procedures by themselves do not provide sufficient appropriate audit evidence on which to base the audit opinion

• TRUE

• FALSE