ACC 409 EXAM QUESTIONS AND ANSWERS WITH COMPLETE
SOLUTIONS GRADED A++
T/F While inspecting documents, auditors should use original documents rather
than copies, because copies are easy for management to falsify.
True
T/F The client's verbal evidence is more reliable than evidence from independent
outside sources.
False
T/F Audit risk is the risk that the auditor expresses an inappropriate audit opinion
when the financial statements are materially misstated.
True
T/F Insistence from the CEO that she must be present at all meetings between the
audit committee and internal/external auditors would cause auditors to assess
inherent risk at a higher level.
True
T/F In most audits, materiality is most commonly expressed as a percentage of
net income.
False
To learn more about a company and its inherent risks, auditors can use which of
the following resources?
Any of the above could be used.
, The risk of material misstatement refers to which of the following?
The combination of inherent risk and control risk.
When an auditor chooses not to rely on a client's internal controls because the
control design is ineffective, which of the following tests are eliminated?
Tests of controls.
What procedure has to be completed at or after the end of the period?
Evaluation of adjusting journal entries.
As inherent risk increases, and other risk factors remain constant, what happens
to the extent of audit work?
Increases.
Which of the following terms best describes the numerical depiction of the
relationship between control risk, inherent risk, detection risk, and audit risk?
Audit risk model.
Which one of the following would be considered the most reliable type of audit
evidence?
Confirmations from banks.
Which item is correct concerning the risk of material misstatement?
Risk of material misstatement is controllable by the client.
Each of the audit procedures that an auditor could select possesses which of the
following characteristics?
Audit procedures take time, effort, and money.
When using confirmations with outside parties, the auditor must assure which of
the following about the outside party?
SOLUTIONS GRADED A++
T/F While inspecting documents, auditors should use original documents rather
than copies, because copies are easy for management to falsify.
True
T/F The client's verbal evidence is more reliable than evidence from independent
outside sources.
False
T/F Audit risk is the risk that the auditor expresses an inappropriate audit opinion
when the financial statements are materially misstated.
True
T/F Insistence from the CEO that she must be present at all meetings between the
audit committee and internal/external auditors would cause auditors to assess
inherent risk at a higher level.
True
T/F In most audits, materiality is most commonly expressed as a percentage of
net income.
False
To learn more about a company and its inherent risks, auditors can use which of
the following resources?
Any of the above could be used.
, The risk of material misstatement refers to which of the following?
The combination of inherent risk and control risk.
When an auditor chooses not to rely on a client's internal controls because the
control design is ineffective, which of the following tests are eliminated?
Tests of controls.
What procedure has to be completed at or after the end of the period?
Evaluation of adjusting journal entries.
As inherent risk increases, and other risk factors remain constant, what happens
to the extent of audit work?
Increases.
Which of the following terms best describes the numerical depiction of the
relationship between control risk, inherent risk, detection risk, and audit risk?
Audit risk model.
Which one of the following would be considered the most reliable type of audit
evidence?
Confirmations from banks.
Which item is correct concerning the risk of material misstatement?
Risk of material misstatement is controllable by the client.
Each of the audit procedures that an auditor could select possesses which of the
following characteristics?
Audit procedures take time, effort, and money.
When using confirmations with outside parties, the auditor must assure which of
the following about the outside party?
