MGMT411 Chapter 9 Test Bank 2023 Questions and Answers {level A+}

Which of the following would not increase the risks of material misstatement at the overall financial statement level? - -effective oversight by the BOARD OF DIRECTORS -The auditor's responsibility section in an audit report states that "...the standards require that we plan and perform the audit to obtain ________ assurance about whether the financial statements are free of material misstatement." What type of assurance is given? - -reasonable -________ risk represents the auditor's assessment of the susceptibility of an assertion to material misstatement, before considering the effectiveness of the client's internal controls. - -inherent -Risk of material misstatement at the assertion level - -determines the NATURE, TIMING, and EXTENT of further auditing procedures. -Assessing the risk of material misstatement is closely related to each of the following except - -not a CRTICAL consideration in most financial statement audits. -Name some examples where the auditor accepts some level of uncertainty in performing the audit function. - -• The inherent uncertainty about the appropriateness of evidence obtained. • The uncertainty about the effectiveness of a client's internal controls • Assessing risks is a matter of professional judgment rather than a precise measurement. -Risk assessment procedures include inquiries of management and others by the auditor. As part of these procedures, the auditor should talk to - -A) internal auditors. B) board of directors. C) individuals involved with regulatory compliance. (all of the above) -Risk assessment procedures include - -OBSERVATION of the entity's operations. -Risk assessment procedures are performed to identify and assess the risk of material misstatement. List three risk assessment procedures. - -1. Analytical procedures 2. Observation and inspection 3. Discussion among engagement team members -When considering the risk of misstatement due to fraud, - -auditing standards outline procedures the auditor should perform to obtain information from management about their consideration of fraud. -A ________ risk represents an identified and assessed risk of material misstatement that, in the auditor's professional judgment, requires special audit consideration. - -financial statement