WGU D251 Advanced Auditing – Questions With
Correct Solutions
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Terms in this set (249)
Performance Materiality is also known Tolerable Error
as _____________.
Auditor uses Performance Materiality Determining significant accounts, locations, and audit
for ____________. procedures.
Performance Materiality is what 75%
percent of Planning Materiality?
What happens is Performance Auditor might not perform sufficient procedures to
Materiality is set too high? detect material misstatements.
What happens if Performance Auditor might perform more substantive procedures
Materiality is set too low? than needed.
Overall Materiality is also known as Planning Materiality
_________.
Auditors use Overall Materiality to Determine whether financial statements overall are
___________. materially correct.
What does Posting Materiality signify? The misstatements identified throughout the audit
that will be considered at the end of the audit in
determining whether the financial statements are
materially correct.
What percentage is Posting 5% of Planning Materiality
Materiality commonly set at?
,What is Materiality? The magnitude of an omission or misstatement of
accounting information that, in light of surrounding
circumstances, makes it probable that the judgment
of a reasonable person relying on the information
would have been changed or influenced by the
omission or misstatement.
What makes a fact Material? If there is a substantial likelihood that a reasonable
investor would have viewed the fact as having
significantly altered the total mix of information made
available.
What is the materiality level that an Performance Materiality
auditor uses for determining
significant accounts, significant
locations, and audit procedures for
those accounts and locations?
An auditor has determined The auditor should perform additional substantive
performance materiality has been set audit procedures.
too high at the beginning of the audit.
Which procedures should this auditor
consider to detect misstatements?
Which risk exists at the overall Risk of material misstatement
financial statement level and at the
assertion level and can be
categorized as involving inherent risk
and control risk?
What represents an identified and Significant risk
assessed risk of material misstatement
that requires special audit
consideration?
What is the impact on the amount of The acceptable audit risk is reduced.
acceptable audit risk if an auditor
believes the chance of financial failure
of a client is high?
, Which factor should lead an auditor to The account balance consists of a large number of
assess inherent risk as high? complex transactions.
Which factor would lead an auditor to The client's use of information technology is
assess client business risk at a higher incompatible across systems and processes.
level?
An auditor determines overall 75% of $500,000
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?
At which percentage do auditors 5% of planning materiality
commonly set posting materiality?
What is Client Business Risk? Risks affecting the business operations and potential
outcomes of an organization's activities.
What does the Risk of Material The Inherent and Control Risks
Misstatement represent?
Who controls the Risk of Material The Client
Misstatement?
What happens to Detection and Audit Detection Risk is lowered to reduce the Audit Risk to
Risk when Risk of Material an acceptable level.
Misstatement is high?
What is Inherent Risk? The likelihood of material misstatement without
considering the effects of internal control
What is Control Risk? The risk of a misstatement occurring or not being
prevented by internal controls
Correct Solutions
Save
Terms in this set (249)
Performance Materiality is also known Tolerable Error
as _____________.
Auditor uses Performance Materiality Determining significant accounts, locations, and audit
for ____________. procedures.
Performance Materiality is what 75%
percent of Planning Materiality?
What happens is Performance Auditor might not perform sufficient procedures to
Materiality is set too high? detect material misstatements.
What happens if Performance Auditor might perform more substantive procedures
Materiality is set too low? than needed.
Overall Materiality is also known as Planning Materiality
_________.
Auditors use Overall Materiality to Determine whether financial statements overall are
___________. materially correct.
What does Posting Materiality signify? The misstatements identified throughout the audit
that will be considered at the end of the audit in
determining whether the financial statements are
materially correct.
What percentage is Posting 5% of Planning Materiality
Materiality commonly set at?
,What is Materiality? The magnitude of an omission or misstatement of
accounting information that, in light of surrounding
circumstances, makes it probable that the judgment
of a reasonable person relying on the information
would have been changed or influenced by the
omission or misstatement.
What makes a fact Material? If there is a substantial likelihood that a reasonable
investor would have viewed the fact as having
significantly altered the total mix of information made
available.
What is the materiality level that an Performance Materiality
auditor uses for determining
significant accounts, significant
locations, and audit procedures for
those accounts and locations?
An auditor has determined The auditor should perform additional substantive
performance materiality has been set audit procedures.
too high at the beginning of the audit.
Which procedures should this auditor
consider to detect misstatements?
Which risk exists at the overall Risk of material misstatement
financial statement level and at the
assertion level and can be
categorized as involving inherent risk
and control risk?
What represents an identified and Significant risk
assessed risk of material misstatement
that requires special audit
consideration?
What is the impact on the amount of The acceptable audit risk is reduced.
acceptable audit risk if an auditor
believes the chance of financial failure
of a client is high?
, Which factor should lead an auditor to The account balance consists of a large number of
assess inherent risk as high? complex transactions.
Which factor would lead an auditor to The client's use of information technology is
assess client business risk at a higher incompatible across systems and processes.
level?
An auditor determines overall 75% of $500,000
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?
At which percentage do auditors 5% of planning materiality
commonly set posting materiality?
What is Client Business Risk? Risks affecting the business operations and potential
outcomes of an organization's activities.
What does the Risk of Material The Inherent and Control Risks
Misstatement represent?
Who controls the Risk of Material The Client
Misstatement?
What happens to Detection and Audit Detection Risk is lowered to reduce the Audit Risk to
Risk when Risk of Material an acceptable level.
Misstatement is high?
What is Inherent Risk? The likelihood of material misstatement without
considering the effects of internal control
What is Control Risk? The risk of a misstatement occurring or not being
prevented by internal controls
