6) If planned detection risk is reduced, the amount of evidence the auditor accumulateswill:A) increase.B) decrease.C) remain unchanged.D) be indeterminate.Answer:A Show Terms:Planned detection risk and amount of evidenceDiff:ModerateObjective:LO 9-6AACSB:Reflective thinking skills We have textbook solutions for you! The document you are viewing contains questions related to this textbook. Fraud Examination Albrecht/Albrecht Expert Verified 7) Planned detection riskI.determines the amount of substantive evidence the auditor plans to accumulate.II.is dependent on inherent risk and control risk.ATerms:Planned detection risk Get answer to your question and much more Diff:ModerateObjective:LO 9-6AACSB:Reflective thinking skills8) Inherent risk is often high for an account such as:A Get answer to your question and much more Terms:Inherent riskDiff:ModerateObjective:LO 9-6AACSB:Reflective thinking skills9) Inherent risk and control risk:BDiff:Moderate Get answer to your question and much more Objective:LO 9-6AACSB:Reflective thinking skills10) To what extent do auditors typically rely on internal controls of their public companyclients?A) extensivelyB) only very littleC) infrequentlyD) neverAnswer:A Terms:Extent auditor rely on internal controls of public company clientDiff:ModerateObjective:LO 9-6AACSB:Reflective thinking skillsTopic:Public 11) Auditors typically rely on internal controls of their private company clients:BDiff:Moderate Get answer to your question and much more Objective:LO 9-6AACSB:Reflective thinking skills12) Acceptable audit risk is ordinarily set by the auditor during planning and:ATerms:Acceptable audit risk Get answer to your question and much more Diff:ChallengingObjective:LO 9-6AACSB:Reflective thinking skills Upload your study docs or become a Course Hero member to access this document Upload your study docs or become a Course Hero member to access this document End of preview. Want to read all 35 pages? Upload your study docs or become a Course Hero member to access this document 9-26(Objectives 9-5, 9-7)The following questions concern the audit risk model.a. Some account balances, such as those for pensions and leases, are theresult of complex calculations. The susceptibility to material misstatements inthese types of accounts is defined as(3) inherent risk.b. As the acceptable level of detection risk decreases, the auditor may do oneor more of the following except change the9-26a.(3)b.(4)c.(3)(4) assurances provided by audit procedures to a lower level.c. Inherent risk and control risk differ from planned detection risk in that they(3) exist independently of the financial statement audit.9-28(Objectives 9-1, 9-2, 9-5, 9-6, 9-8)The following questions concern auditorresponsibilities related to the assessment of risks of material misstatement.a. Which of the following procedures would a CPA most likely perform duringthe planning stage of the audit?(2) Determine areas where there is a higher risk of material misstatement. What would the auditor do if planned detection risk is reduced?Planned detection risk is the risk that audit evidence will fail to detect misstatements that exceed a tolerable amount. When an auditor reduces the planned detection risk, this will require the collection of more evidence.
What happens when detection risk decreases?When detection risk is set at low, then that means that risk of material misstatement was assessed to be high. Since detection risk is set at low, that means that the audit team will have to perform a HIGHER amount of substantive testing in order to reduce the risk of not detecting a material misstatement.
What happens when detection risk increases?Detection Risk and quality of audit have an inverse relationship: if detection risk is high, lower the quality of audit and if detection risk is low, generally increase the quality of audit.
What is the relationship between audit risk and detection risk?The auditor uses the assessed risk of material misstatement to determine the appropriate level of detection risk for a financial statement assertion. The higher the risk of material misstatement, the lower the level of detection risk needs to be in order to reduce audit risk to an appropriately low level.
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