1|Page
WGU D251 Exam (2026) UPDATE Verified Questions And
Answers | With 100% Correct Answers graded A+
Guaranteed Success!!
What is the materiality level that an auditor uses for determining significant
accounts, significant locations, and audit procedures for those accounts and
locations? ......ANSWER......Performance materiality
An auditor has determined performance materiality has been set too high at the
beginning of the audit. Which procedures should this auditor consider to detect
misstatements? ......ANSWER......The auditor should perform additional
substantive audit procedures
Which risk exists at the overall financial statement level and at the assertion
level and can be categorized as involving inherent risk and control risk?
......ANSWER......Risk of material misstatement
What represents an identified and assessed risk of material misstatement that
requires special audit consideration? ......ANSWER......Significant risk
What is the impact on the amount of acceptable audit risk if an auditor believes
the chance of financial failure of a client is high? ......ANSWER......The acceptable
audit risk is reduced.
Which factor should lead an auditor to assess inherent risk as high?
......ANSWER......The account balance consists of a large number of complex
transactions.
pg. 1
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Which factor would lead an auditor to assess client business risk at a higher
level? ......ANSWER......The client's use of information technology is incompatible
across systems and processes.
An auditor determines overall materiality of $500,000 would be material to the
income statement and $1,000,000 would be material to the balance sheet.
Which amount would an auditor typically assess performance materiality to be
for this client? ......ANSWER......75% of $500,000
At which percentage do auditors commonly set posting materiality?
......ANSWER......5% of planning materiality
What is quantitative evaluation? ......ANSWER......Determining whether the
upper limit of the possible deviation rate exceeds the tolerable deviation rate
In which circumstance would an auditor change an audit objective to estimating
the correct value? ......ANSWER......When the total estimated misstatement
exceeds the tolerable misstatement
What describes tainting percentage? ......ANSWER......The percentage of
misstatement present in a logical unit
Which statement reflects a 5% risk of overreliance? ......ANSWER......95%
confidence level that the actual rate of deviation will not exceed the tolerable
deviation
What is the objective of sampling when testing controls? ......ANSWER......To
determine whether controls are operating effectively
pg. 2
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What is the primary objective of monetary unit sampling? ......ANSWER......To
identify overstatement errors
How can an auditor increase the chances that systematically selected samples
are representative of the population? ......ANSWER......By using multiple random
starts
Which sampling method allows an auditor to measure the risk of making an
incorrect inference about the population from which the sample is taken?
......ANSWER......Statistical
Which action must an auditor take after discovering an illegal act during an audit
of a publicly traded company? ......ANSWER......Alert management and the audit
committee, even if the act is immaterial
Which type of misstatement results from an auditor's best estimate of the total
misstatements in a given population based on the misstatements detected in an
audit sample of that population? ......ANSWER......Projected misstatements
When do generally accepted accounting principles (GAAP) require a client to
only disclose a contingent loss that might occur, and either an accrual has not
been made or an exposure exists that is greater than the amount accrued?
......ANSWER......When the loss contingency is reasonably possible
A client made a decision to discontinue a major line of business after the
balance sheet date.How should an auditor treat this type of subsequent event?
......ANSWER......Disclose the information in the notes to the financial
statements
pg. 3
, 4|Page
Who is responsible for designing and maintaining policies and procedures to
identify, evaluate, and account for loss contingencies in accordance with
generally accepted accounting principles (GAAP)? ......ANSWER......Management
Which procedures help an auditor form an overall conclusion about whether
financial statements are consistent with the auditor's understanding of an
entity? ......ANSWER......Review analytical procedures
What is a risk-based review in which a reviewer evaluates the significant
judgments and conclusions made by an audit team?
......ANSWER......Engagement quality review
Which circumstance involves acts of omission or commission by an entity, either
intentional or unintentional, which are contrary to the prevailing laws or
regulations? ......ANSWER......Noncompliance
How should an auditor respond to a client's claim that a financial statement
estimate is at least as good as the auditor's estimate? ......ANSWER......The
auditor should gather sufficient evidence related to the estimate.
What is the major difference between a Type I subsequent event and a Type II
subsequent event? ......ANSWER......The financial statements should be adjusted
to reflect Type I subsequent events.
What is the difference between Type 1 and Type 2 subsequent Events?
......ANSWER......Type I subsequent events provide evidence about conditions
that existed on or before the balance sheet date. These events are recognized in
pg. 4
WGU D251 Exam (2026) UPDATE Verified Questions And
Answers | With 100% Correct Answers graded A+
Guaranteed Success!!
What is the materiality level that an auditor uses for determining significant
accounts, significant locations, and audit procedures for those accounts and
locations? ......ANSWER......Performance materiality
An auditor has determined performance materiality has been set too high at the
beginning of the audit. Which procedures should this auditor consider to detect
misstatements? ......ANSWER......The auditor should perform additional
substantive audit procedures
Which risk exists at the overall financial statement level and at the assertion
level and can be categorized as involving inherent risk and control risk?
......ANSWER......Risk of material misstatement
What represents an identified and assessed risk of material misstatement that
requires special audit consideration? ......ANSWER......Significant risk
What is the impact on the amount of acceptable audit risk if an auditor believes
the chance of financial failure of a client is high? ......ANSWER......The acceptable
audit risk is reduced.
Which factor should lead an auditor to assess inherent risk as high?
......ANSWER......The account balance consists of a large number of complex
transactions.
pg. 1
,2|Page
Which factor would lead an auditor to assess client business risk at a higher
level? ......ANSWER......The client's use of information technology is incompatible
across systems and processes.
An auditor determines overall materiality of $500,000 would be material to the
income statement and $1,000,000 would be material to the balance sheet.
Which amount would an auditor typically assess performance materiality to be
for this client? ......ANSWER......75% of $500,000
At which percentage do auditors commonly set posting materiality?
......ANSWER......5% of planning materiality
What is quantitative evaluation? ......ANSWER......Determining whether the
upper limit of the possible deviation rate exceeds the tolerable deviation rate
In which circumstance would an auditor change an audit objective to estimating
the correct value? ......ANSWER......When the total estimated misstatement
exceeds the tolerable misstatement
What describes tainting percentage? ......ANSWER......The percentage of
misstatement present in a logical unit
Which statement reflects a 5% risk of overreliance? ......ANSWER......95%
confidence level that the actual rate of deviation will not exceed the tolerable
deviation
What is the objective of sampling when testing controls? ......ANSWER......To
determine whether controls are operating effectively
pg. 2
,3|Page
What is the primary objective of monetary unit sampling? ......ANSWER......To
identify overstatement errors
How can an auditor increase the chances that systematically selected samples
are representative of the population? ......ANSWER......By using multiple random
starts
Which sampling method allows an auditor to measure the risk of making an
incorrect inference about the population from which the sample is taken?
......ANSWER......Statistical
Which action must an auditor take after discovering an illegal act during an audit
of a publicly traded company? ......ANSWER......Alert management and the audit
committee, even if the act is immaterial
Which type of misstatement results from an auditor's best estimate of the total
misstatements in a given population based on the misstatements detected in an
audit sample of that population? ......ANSWER......Projected misstatements
When do generally accepted accounting principles (GAAP) require a client to
only disclose a contingent loss that might occur, and either an accrual has not
been made or an exposure exists that is greater than the amount accrued?
......ANSWER......When the loss contingency is reasonably possible
A client made a decision to discontinue a major line of business after the
balance sheet date.How should an auditor treat this type of subsequent event?
......ANSWER......Disclose the information in the notes to the financial
statements
pg. 3
, 4|Page
Who is responsible for designing and maintaining policies and procedures to
identify, evaluate, and account for loss contingencies in accordance with
generally accepted accounting principles (GAAP)? ......ANSWER......Management
Which procedures help an auditor form an overall conclusion about whether
financial statements are consistent with the auditor's understanding of an
entity? ......ANSWER......Review analytical procedures
What is a risk-based review in which a reviewer evaluates the significant
judgments and conclusions made by an audit team?
......ANSWER......Engagement quality review
Which circumstance involves acts of omission or commission by an entity, either
intentional or unintentional, which are contrary to the prevailing laws or
regulations? ......ANSWER......Noncompliance
How should an auditor respond to a client's claim that a financial statement
estimate is at least as good as the auditor's estimate? ......ANSWER......The
auditor should gather sufficient evidence related to the estimate.
What is the major difference between a Type I subsequent event and a Type II
subsequent event? ......ANSWER......The financial statements should be adjusted
to reflect Type I subsequent events.
What is the difference between Type 1 and Type 2 subsequent Events?
......ANSWER......Type I subsequent events provide evidence about conditions
that existed on or before the balance sheet date. These events are recognized in
pg. 4
