Module 2 - Audit Planning

As per SA 300, the audit plan shall include a description of ____________. 

• 1. the nature, timing and extent of planned risk assessment procedures, as determined under SA 315.

• 1. the nature, timing and extent of planned further audit procedures at the assertion level, as determined under SA 330.

• 1. other planned audit procedures that are required to be carried out so that the engagement complies with SAs.

• 1. all of the above.

The auditor should apply analytical procedures at the planning stage to __________. 

• 1. assist in understanding the business and in identifying areas of potential risk.

• 1. obtain assurance that financial statement account balances do not contain material misstatements.

• 1. assist the auditor in assessing that the overall financial statement presentation makes sense based on the audit results and an understanding of the business.

• 1. assist the auditor in assessing that all significant fluctuations and other unusual items have been adequately explained.

When establishing the overall audit strategy, the auditor shall determine materiality for the __________.              

• 1. financial statement as a whole.

• 1. particular classes of transactions, account balances or disclosures.

• For one accounting record

• None of these

Audit strategy is concerned with designing optimized ________ that seek to achieve the necessary audit assurance at the lower cost within the constraints of the information available.   

• 1. audit procedures

• 1. audit techniques

• 1. audit approaches

• 1. audit programme

Process of establishing the overall audit strategy assists the auditor to determine, subject to the completion of the auditor's assessment procedures, such matters as:    

• 1. Nature, timing and extent of risk assessment procedures.

• 1. Nature, timing and extent of substantive procedures.

• 1. Management of resources as to engagement team members.

• 1. Understanding of terms of audit engagement with the client.

1. Which of the following is not a type of Audit Opinion?

• Qualified Opinion

• Adverse Opinion

• Reverse Opinion

• Disclaimer Opinion

The likelihood that material misstatements may have entered the accounting system and not been detected and

corrected by the client’s internal control is referred to as

• Inherent Risk

• Control Risk

• Detection Risk

• Risk of Material Misstatement

The risk that the auditors’ own testing procedures will lead to the decision that material mis- statements do not

exist in the financial statements when in fact such misstatements do exist is

• Audit Risk

• Inherent Risk

• Control Risk

• Detection Risk

What is the primary objective of the fraud review?

• Determine audit risk and materiality.

• Identify whether analytical procedures should be applied to the revenue accounts.

• Assess the potential for material misstatement due to fraud.

• Determine whether the planned procedures in the audit plan will satisfy the general audit objectives.

A measure of the auditor’s assessment of the likelihood that there are material misstatements in an account before considering the effectiveness of the client’s internal control is called

• control risk.

• acceptable audit risk.

• statistical risk.

• inherent risk.