ACC 409 Exam 2 Questions with Correct Answers Latest Update 2025-2026
Which best describes the numerical depiction of the relationship between control, inherent, detection,
and audit risk? - Answers Audit risk model
Which of the following factors will result in control risk being assessed at a higher level? - Answers There
is a lack of supervision of accounting personnel
The risk of material misstatement refers to which of the following? - Answers The combination of
inherent risk and control risk
The lower the dollar amount of the performance materiality the more audit evidence is required. -
Answers True
Consideration of internal control effectiveness is to determine nature, extent, & timing of substantive
testing. - Answers True
Which of the following best describes year-to-year comparisons of account balances? - Answers Trend
analyses
A misstatement is an error, either intentional or unintentional, that exists in a transaction or account
balance. - Answers True
A risk factor indicating a heightened risk of fraud would be considered a significant risk. - Answers True
Which of the following are two frequently used planning analytical procedures? - Answers Ratio analyses
and trend analyses
If materiality changes during the audit, what happens to previous decisions using the initial materiality
setting? - Answers The auditor reassess those previous decisions
Audit risk is the risk the auditor expresses an inappropriate audit opinion when financials are materially
misstated. - Answers True
If $15,000 is material to income statement, but $25,000 is material to the balance sheet, materiality
should be what amount? - Answers $15,000
Auditors and management should agree on what is considered material. - Answers False
Performance materiality is used for assessing risks and determining the nature, timing, and extent of
procedures. - Answers True
Which of the following statements is false? - Answers Inherent risk is inversely related to the level of
control risk
Which of the following approaches can be used to introduce unpredictability into the audit? - Answers
Performing procedures on an unannounced basis
, What is the auditor trying to accomplish by varying the timing of audit procedures from the prior year? -
Answers Introduce unpredictability
When choosing not to rely on internal controls because the control design is ineffective, which tests are
eliminated? - Answers Tests of controls
What type of relationship exists between audit risk and detection risk? - Answers Direct
An increase in the risk of material misstatement would lead to which of the following responses? -
Answers Increase in the extent of audit procedures
Ineffective internal controls result in higher risk of material misstatement than effective internal
controls. - Answers True
Internal controls that the auditor expects to rely on to reduce substantive testing must be tested. -
Answers True
Heightened risk of material misstatement causes the auditor to perform audit procedures closer to year
end. - Answers True
As inherent risk increases, and other factors remain constant, what happens to the extent of work? -
Answers Increases
In MUS, what is meant by a sampling interval of 900? - Answers Every 900th dollar will be selected
Risk of incorrect acceptance of a balance as correct, when it is not correct bears on the effectiveness of
an audit. - Answers True
Blockchain is a rapidly evolving phenomenon that is useful in recording which of the following types of
transactions? - Answers Digital currency transactions
Dividing the population into relatively homogeneous groups to reduce sample size is which of the
following terms? - Answers Stratification
Extracting data from the client's computer system is on of the tasks that can be performed by data
analytics tools. - Answers True
For which of the following audit procedures would sampling be most appropriate? - Answers
Confirmation
The level at which a control's failure to operate would cause the auditor to conclude that the control is
not effective. - Answers Tolerable failure rate
Which of the following statistical sampling methods is most commonly used to test control procedures?
- Answers Attributes sampling
Which best describes the numerical depiction of the relationship between control, inherent, detection,
and audit risk? - Answers Audit risk model
Which of the following factors will result in control risk being assessed at a higher level? - Answers There
is a lack of supervision of accounting personnel
The risk of material misstatement refers to which of the following? - Answers The combination of
inherent risk and control risk
The lower the dollar amount of the performance materiality the more audit evidence is required. -
Answers True
Consideration of internal control effectiveness is to determine nature, extent, & timing of substantive
testing. - Answers True
Which of the following best describes year-to-year comparisons of account balances? - Answers Trend
analyses
A misstatement is an error, either intentional or unintentional, that exists in a transaction or account
balance. - Answers True
A risk factor indicating a heightened risk of fraud would be considered a significant risk. - Answers True
Which of the following are two frequently used planning analytical procedures? - Answers Ratio analyses
and trend analyses
If materiality changes during the audit, what happens to previous decisions using the initial materiality
setting? - Answers The auditor reassess those previous decisions
Audit risk is the risk the auditor expresses an inappropriate audit opinion when financials are materially
misstated. - Answers True
If $15,000 is material to income statement, but $25,000 is material to the balance sheet, materiality
should be what amount? - Answers $15,000
Auditors and management should agree on what is considered material. - Answers False
Performance materiality is used for assessing risks and determining the nature, timing, and extent of
procedures. - Answers True
Which of the following statements is false? - Answers Inherent risk is inversely related to the level of
control risk
Which of the following approaches can be used to introduce unpredictability into the audit? - Answers
Performing procedures on an unannounced basis
, What is the auditor trying to accomplish by varying the timing of audit procedures from the prior year? -
Answers Introduce unpredictability
When choosing not to rely on internal controls because the control design is ineffective, which tests are
eliminated? - Answers Tests of controls
What type of relationship exists between audit risk and detection risk? - Answers Direct
An increase in the risk of material misstatement would lead to which of the following responses? -
Answers Increase in the extent of audit procedures
Ineffective internal controls result in higher risk of material misstatement than effective internal
controls. - Answers True
Internal controls that the auditor expects to rely on to reduce substantive testing must be tested. -
Answers True
Heightened risk of material misstatement causes the auditor to perform audit procedures closer to year
end. - Answers True
As inherent risk increases, and other factors remain constant, what happens to the extent of work? -
Answers Increases
In MUS, what is meant by a sampling interval of 900? - Answers Every 900th dollar will be selected
Risk of incorrect acceptance of a balance as correct, when it is not correct bears on the effectiveness of
an audit. - Answers True
Blockchain is a rapidly evolving phenomenon that is useful in recording which of the following types of
transactions? - Answers Digital currency transactions
Dividing the population into relatively homogeneous groups to reduce sample size is which of the
following terms? - Answers Stratification
Extracting data from the client's computer system is on of the tasks that can be performed by data
analytics tools. - Answers True
For which of the following audit procedures would sampling be most appropriate? - Answers
Confirmation
The level at which a control's failure to operate would cause the auditor to conclude that the control is
not effective. - Answers Tolerable failure rate
Which of the following statistical sampling methods is most commonly used to test control procedures?
- Answers Attributes sampling
