WGU D251 - Advanced Auditing questions with
verified answers
Acquisition and payment cycle significant accounts Ans✓✓✓ inventory, COGS,
AP, related expense accounts
Adverse Opinion Ans✓✓✓ a report issued when the auditor believes the financial
statements are so materially misstated or misleading as a whole that they do not
present fairly the entity's financial position or the results of its operations and
cash flows in conformity with GAAP
Attributes sampling Ans✓✓✓ Used to estimate the rate of control procedure
failures based on a sample audited for an attribute (characteristic)
Audit Risk Model Formula Ans✓✓✓ Audit Risk = Inherent Risk x Control Risk x
Detection Risk
Audit sampling Ans✓✓✓ looking at less than 100% of the transactions that
occurred during the audit period; used to test operations of controls and accuracy
of account balances
Client business risks Ans✓✓✓ Risks affecting the business operations and
potential outcomes of an organization's activities; likely pervasive across
organization; can affect risk of material misstatement
Completeness assertion Ans✓✓✓ All transactions and events that should have
been recorded for the period have been recorded with supporting documents as
required per controls
, Considerations when setting materiality Ans✓✓✓ statement items users will
focus on; nature of client and industry; size of client; client financing; benchmark
volatility
Control risk Ans✓✓✓ The risk that a material misstatement that could occur in
an account will not be prevented or detected on a timely basis by internal
controls
Data analytics tools Ans✓✓✓ Software programs that can test 100% of the
population to use qualitative and quantitative techniques and processes to
identify risk areas and patterns
Detection risk Ans✓✓✓ The risk of not detecting material misstatements; the
only part of the audit risk formula an auditor can control
Disclaimers of opinion Ans✓✓✓ A scope limitation exists, and a qualified opinion
is not appropriate; Substantial doubt exists about the client being a going
concern, and an unqualified opinion with an additional paragraph is not
appropriate; or The auditor lacks independence
Emphasis-of-Matter Ans✓✓✓ extra paragraph (4th) added at the bottom of the
auditor's report that emphasizes a matter that would be important to note
separately to the reader. Report remains unqualified
Engagement review Ans✓✓✓ Reviewer evaluates the significant judgments and
conclusions made by an audit team
verified answers
Acquisition and payment cycle significant accounts Ans✓✓✓ inventory, COGS,
AP, related expense accounts
Adverse Opinion Ans✓✓✓ a report issued when the auditor believes the financial
statements are so materially misstated or misleading as a whole that they do not
present fairly the entity's financial position or the results of its operations and
cash flows in conformity with GAAP
Attributes sampling Ans✓✓✓ Used to estimate the rate of control procedure
failures based on a sample audited for an attribute (characteristic)
Audit Risk Model Formula Ans✓✓✓ Audit Risk = Inherent Risk x Control Risk x
Detection Risk
Audit sampling Ans✓✓✓ looking at less than 100% of the transactions that
occurred during the audit period; used to test operations of controls and accuracy
of account balances
Client business risks Ans✓✓✓ Risks affecting the business operations and
potential outcomes of an organization's activities; likely pervasive across
organization; can affect risk of material misstatement
Completeness assertion Ans✓✓✓ All transactions and events that should have
been recorded for the period have been recorded with supporting documents as
required per controls
, Considerations when setting materiality Ans✓✓✓ statement items users will
focus on; nature of client and industry; size of client; client financing; benchmark
volatility
Control risk Ans✓✓✓ The risk that a material misstatement that could occur in
an account will not be prevented or detected on a timely basis by internal
controls
Data analytics tools Ans✓✓✓ Software programs that can test 100% of the
population to use qualitative and quantitative techniques and processes to
identify risk areas and patterns
Detection risk Ans✓✓✓ The risk of not detecting material misstatements; the
only part of the audit risk formula an auditor can control
Disclaimers of opinion Ans✓✓✓ A scope limitation exists, and a qualified opinion
is not appropriate; Substantial doubt exists about the client being a going
concern, and an unqualified opinion with an additional paragraph is not
appropriate; or The auditor lacks independence
Emphasis-of-Matter Ans✓✓✓ extra paragraph (4th) added at the bottom of the
auditor's report that emphasizes a matter that would be important to note
separately to the reader. Report remains unqualified
Engagement review Ans✓✓✓ Reviewer evaluates the significant judgments and
conclusions made by an audit team
