Advanced Auditing Final Questions & Answers 100% Correct!

Advanced Auditing Final Questions & Answers 100% Correct! 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. 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