Week 2 Audit and Assurance

Which of the following describes detection risk

• The risk of misstatement due to a failure of controls

• The risk that the auditor fails to detect a misstatement in the f/s

• The risk inherent in that particular business

What levels of materiality are appropriate when applying the revenue benchmark to a trading entity

• 5% -10%

• 0.5% - 3%

• 2% - 5%

• 10% - 20%

Which of the following matters would the overall audit strategy include?

• The applicable financial reporting framework

• The nature, timing and extent of audit procedures at assertion level

• The timetable of the planned audit work

• The names of the staff performing each audit procedure

Which of the following is control risk

• The risk that a misstatement could occur and not be detected by controls

• Risk that the auditor will not detect a misstatement that exists

• The susceptibility of a transaction, account balance or disclosure to error

• The risk that the audit opinion is incorrect

An appropriate threshold for materiality according to ISA 320 in relation to total assets is

• 0.5% - 1%

• 5% - 10%

• 10% - 20%

• 1% - 2%

Risk that auditor may unknowingly fail to issue a qualified audit report on f/s that are materially misstated is

• Detection risk

• Control risk

• Inherent risk

• Audit risk

What are the two elements of risk of material misstatement at the assertion level

• Inherent risk and detection risk

• Inherent risk and control risk

• Audit risk and detection risk

• Control risk and detection risk

Which of the following would normally be included in the audit plan

• Reporting objectives

• Industry-specific financial reporting requirements

• Nature. timing and extent of planned risk assessment procedures

• The type of audit report to be issued

Who is responsible for the prevention and detection of fraud

• External auditor

• Internal auditor

• Those charged with governance and management

• Audit committee

Which of the following is not an objective of audit planning

• To determine the scope of the engagement

• Ensure appropriate attention is devoted to the important areas of the audit

• To identify potential problems and resolve them on a timely bias

• To assign work to members of the audit team