D251 Advanced Auditing UPDATED ACTUAL Questions and
CORRECT Answers
Which phrase or term regarding materiality is used by the significantly altered the total mix of information available
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
Which materiality does an auditor use when determining performance materiality
whether the financial statements overall are materially
correct?
performance materiality
Specific materiality
planning materiality
Posting materiality
What describes the misstatements identified throughout Posting materiality
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
,When materiality judgments change during the audit The auditor reassesses those previous audit decisions.
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.
Which factor would result in control risk being assessed There is a lack of supervision of accounting personnel.
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.
Which technique is used to analyze year-to-year Trend analysis
comparisons of account balances?
Trend analysis
Ratio analysis
Variance analysis
Reasonableness test
Which term describes the numerical depiction of the Audit risk model
relationship between control risk, inherent risk, and
detection risk?
Risk assessment process
Risk of material misstatement
Data modeling
Audit risk model
, Which risk factor suggests a heightened level of risk of Having key personnel of a company depart
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
What is the relationship between the risk of material Inverse
misstatement and audit risk?
Correlational
Direct
None
Inverse
What is the typical range for the setting of audit risk? 1% to 5%
0% to 5%
0% to 10%
1% to 10%
1% to 5%
Which risk result would likely be achieved from using a 1% A low detection risk and a low audit risk
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
Which tests are eliminated when an auditor chooses not Tests of control
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
CORRECT Answers
Which phrase or term regarding materiality is used by the significantly altered the total mix of information available
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
Which materiality does an auditor use when determining performance materiality
whether the financial statements overall are materially
correct?
performance materiality
Specific materiality
planning materiality
Posting materiality
What describes the misstatements identified throughout Posting materiality
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
,When materiality judgments change during the audit The auditor reassesses those previous audit decisions.
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.
Which factor would result in control risk being assessed There is a lack of supervision of accounting personnel.
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.
Which technique is used to analyze year-to-year Trend analysis
comparisons of account balances?
Trend analysis
Ratio analysis
Variance analysis
Reasonableness test
Which term describes the numerical depiction of the Audit risk model
relationship between control risk, inherent risk, and
detection risk?
Risk assessment process
Risk of material misstatement
Data modeling
Audit risk model
, Which risk factor suggests a heightened level of risk of Having key personnel of a company depart
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
What is the relationship between the risk of material Inverse
misstatement and audit risk?
Correlational
Direct
None
Inverse
What is the typical range for the setting of audit risk? 1% to 5%
0% to 5%
0% to 10%
1% to 10%
1% to 5%
Which risk result would likely be achieved from using a 1% A low detection risk and a low audit risk
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
Which tests are eliminated when an auditor chooses not Tests of control
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
