Materiality and Audit Risk

1.

Multiple Choice

45 sec

1 pt

_________ is the risk that an auditor expresses an inappropriate opinion on the financial statements.

Fraud

Inherent Risk

Audit Risk

Materiality

2.

Multiple Choice

45 sec

1 pt

Materiality does depend on the decisions of users who rely on the statements to make the decisions

TRUE

FALSE

3.

Multiple Choice

45 sec

1 pt

Auditing standards define ________ as the magnitude of misstatements that individually, or when aggregated with other misstatements, could reasonably be expected to influence the economic decisions of users made on the basis of the financial statements.

Fraud

Inherent Risk

Materiality

Detection Risk

4.

Multiple Choice

45 sec

1 pt

Factor that in assessing inherent risk, exclude :

Nature of client

Integrity of management

Client motivation

Nature of audit test

5.

Multiple Choice

45 sec

1 pt

There are types of risk, exclude :

Inherent Risk

Detection Risk

Control Risk

Internal Risk

6.

Multiple Choice

45 sec

1 pt

Which statement is true about effect for audit risk and business risk:

Audit risk : Credibility of an

auditor will be questioned

business risk : Gain of customer

Audit Risk

Business Risk

7.

Multiple Choice

45 sec

1 pt

Which one is not the level of audit materiality ?

Immaterial

Material

Very Material

Detection Risk

8.

Multiple Choice

45 sec

1 pt

Which one is not a preliminary judgements about audit materiality ?

determining the nature, timing and extent of risk assessment procedures

Identifying and assessing the risk of material misstatements

Determining the nature, timing and extent of further audit procedures

The nature of business entity

9.

Multiple Choice

45 sec

1 pt

Arrange the statement based on stage of audit materiality in audit process

i. involve determining

tolerable misstatement based on planning materiality.

ii. Materiality in planning and performing an Audit states that designing the audit plan, an auditor needs to establish an acceptable level of materiality so as to detect quantitative material misstatements.

iii. completed near the end of

the audit, and the auditor evaluates all the audit evidence gathered.

i, ii, iii

ii, i, iii

iii, ii, i

ii, iii, i

10.

Multiple Choice

45 sec

1 pt

The factors effecting the auditor's judgement about materiality are as follows:

i. materiality is a relative concept rather than an absolute concept

ii. bases are needed for evaluating materiality

iii. qualitative factors

iv. quantitative factors

ii, iii, iv

i, iii, iv

i, ii, iii

i, ii, iv

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