PALP Week 7

Describe the risks that can be controlled by the auditor

• Audit Risk

• Inherent Risk

• Control Risk

• Detection Risk

Which audit test is done during the planning phase?

• Test of control

• Substantive testing

• Test of detail

• Risk assessment Procedures

Risk assessment Procedures include all except for:

• Inspection

• Observation

• Inquiries

• Reperformance

The risk of material misstatement occuring in an account, assuming an absence of internal control, is referred to as:

• Control Risk

• Detection Risk

• Inherent Risk

• Audit Risk

Audit risk is typically considered and assessed:

• At the assertion level

• At the account balance level

• For the Financial Statement as a whole

• All of the above

Auditors are required to have sufficient evidence to reduce audit risk

• True

• False

When RMM is high, the auditor should

• Adjust DR to be lower and do less substantive procedures

• Adjust DR to be higher and do more substantive Procedures

• Adjust DR to be higher and do less substantive procedures

• Adjust DR to be lower and do more substantive procedures

The auditor need to adjust the RMM to lower the AR to an acceptably low level.

• True

• False

The auditor will perform more substantive procedures when the control risk is low

• True

• False

If the RMM is high, the DR is also high

• True

• False