D251 Advanced Auditing Final Exam New 2023 with
complete solution
Which phrase or term regarding materiality is used by the Supreme Court of the
United States and is not found in FASB Concepts Statements No. 2
in light of surrounding circumstances
significantly altered the total mix of information available
magnitude of an omission or misstatement
probable that the judgment of a reasonable person
significantly altered the total mix of information available
Which materiality does an auditor use when determining whether the financial
statements overall are materially correct?
performance materiality
Specific materiality
planning materiality
Posting materiality
performance materiality
What describes the misstatements identified throughout the audit that will be
considered at the end of the audit in determining whether the financial
statements overall are materially correct?
Posting materiality
Tolerable error
Overall materiality
Performance materiality
Posting materiality
When materiality judgments change during the audit opinion formulation
process, what happens to previous audit decisions that were based on
evidence obtained using the initial materiality setting?
The auditor repeats all audit procedures performed prior to the change in the
materiality judgments.
The auditor reassesses those previous audit decisions.
,The auditor takes no action.
The auditor modifies the audit opinion to note the change in the materiality
judgments.
The auditor reassesses those previous audit decisions.
Which factor would result in control risk being assessed at a higher level?
Controls are well designed.
Accounting staff are well trained and educated.
There is a lack of supervision of accounting personnel.
The control environment is operating effectively.
There is a lack of supervision of accounting personnel.
Which technique is used to analyze year-to-year comparisons of account
balances?
Trend analysis
Ratio analysis
Variance analysis
Reasonableness test
Trend analysis
Which term describes the numerical depiction of the relationship between control
risk, inherent risk, and detection risk?
Risk assessment process
Risk of material misstatement
Data modeling
Audit risk model
Audit risk model
Which risk factor suggests a heightened level of risk of material misstatement?
Having key personnel of a company depart
Having a stable product
Declining a merger with another company
,Having few immaterial related-party transactions
Having key personnel of a company depart
What is the relationship between the risk of material misstatement and audit risk?
Correlational
Direct
None
Inverse
Inverse
What is the typical range for the setting of audit risk?
0% to 5%
0% to 10%
1% to 10%
1% to 5%
1% to 5%
Which risk result would likely be achieved from using a 1% level of detection
risk?
A high detection risk and a low audit risk
A low detection risk and a low audit risk
A low detection risk and a high audit risk
A high detection risk and a high audit risk
A low detection risk and a low audit risk
Which tests are eliminated when an auditor chooses not to rely on a client's
internal controls because the control design is ineffective?
Inquiries
Tests of control
Tests of details of balances
Substantive analytical procedures
Tests of control
, In which audit procedure would sampling be appropriate?
Observation
Inquiry
Confirmation
Analytics
Confirmation
What is sampling risk?
When the sample does not contain characteristics representative of the sample
such that inferences made about that sample are incorrect
When the auditor incorrectly applies sampling methodology
When the sample does not contain characteristics representative of the
population such that inferences made about that population are incorrect
When the sample size is larger than needed
When the sample does not contain characteristics representative of the sample such
that inferences made about that sample are incorrect
What is the auditor most concerned with when performing sampling?
Risk of incorrect rejection
Risk of incorrect acceptance
Risk of errors in the population
Risk of excess sample size
Risk of incorrect acceptance
What is a factor of nonsampling risk?
Using nonstatistical sampling
Having a sample that does not represent the population
Using a random sample selection
Not carrying out the appropriate audit procedure
Not carrying out the appropriate audit procedure
Why do some auditors restrict the use of nonstatistical sampling?
It is less risky.
complete solution
Which phrase or term regarding materiality is used by the Supreme Court of the
United States and is not found in FASB Concepts Statements No. 2
in light of surrounding circumstances
significantly altered the total mix of information available
magnitude of an omission or misstatement
probable that the judgment of a reasonable person
significantly altered the total mix of information available
Which materiality does an auditor use when determining whether the financial
statements overall are materially correct?
performance materiality
Specific materiality
planning materiality
Posting materiality
performance materiality
What describes the misstatements identified throughout the audit that will be
considered at the end of the audit in determining whether the financial
statements overall are materially correct?
Posting materiality
Tolerable error
Overall materiality
Performance materiality
Posting materiality
When materiality judgments change during the audit opinion formulation
process, what happens to previous audit decisions that were based on
evidence obtained using the initial materiality setting?
The auditor repeats all audit procedures performed prior to the change in the
materiality judgments.
The auditor reassesses those previous audit decisions.
,The auditor takes no action.
The auditor modifies the audit opinion to note the change in the materiality
judgments.
The auditor reassesses those previous audit decisions.
Which factor would result in control risk being assessed at a higher level?
Controls are well designed.
Accounting staff are well trained and educated.
There is a lack of supervision of accounting personnel.
The control environment is operating effectively.
There is a lack of supervision of accounting personnel.
Which technique is used to analyze year-to-year comparisons of account
balances?
Trend analysis
Ratio analysis
Variance analysis
Reasonableness test
Trend analysis
Which term describes the numerical depiction of the relationship between control
risk, inherent risk, and detection risk?
Risk assessment process
Risk of material misstatement
Data modeling
Audit risk model
Audit risk model
Which risk factor suggests a heightened level of risk of material misstatement?
Having key personnel of a company depart
Having a stable product
Declining a merger with another company
,Having few immaterial related-party transactions
Having key personnel of a company depart
What is the relationship between the risk of material misstatement and audit risk?
Correlational
Direct
None
Inverse
Inverse
What is the typical range for the setting of audit risk?
0% to 5%
0% to 10%
1% to 10%
1% to 5%
1% to 5%
Which risk result would likely be achieved from using a 1% level of detection
risk?
A high detection risk and a low audit risk
A low detection risk and a low audit risk
A low detection risk and a high audit risk
A high detection risk and a high audit risk
A low detection risk and a low audit risk
Which tests are eliminated when an auditor chooses not to rely on a client's
internal controls because the control design is ineffective?
Inquiries
Tests of control
Tests of details of balances
Substantive analytical procedures
Tests of control
, In which audit procedure would sampling be appropriate?
Observation
Inquiry
Confirmation
Analytics
Confirmation
What is sampling risk?
When the sample does not contain characteristics representative of the sample
such that inferences made about that sample are incorrect
When the auditor incorrectly applies sampling methodology
When the sample does not contain characteristics representative of the
population such that inferences made about that population are incorrect
When the sample size is larger than needed
When the sample does not contain characteristics representative of the sample such
that inferences made about that sample are incorrect
What is the auditor most concerned with when performing sampling?
Risk of incorrect rejection
Risk of incorrect acceptance
Risk of errors in the population
Risk of excess sample size
Risk of incorrect acceptance
What is a factor of nonsampling risk?
Using nonstatistical sampling
Having a sample that does not represent the population
Using a random sample selection
Not carrying out the appropriate audit procedure
Not carrying out the appropriate audit procedure
Why do some auditors restrict the use of nonstatistical sampling?
It is less risky.
