What would most effectively describe the risk of incorrect acceptance in terms of substantive audit testing?

Related Mcqs:

1. What would most appropriately describe the risk of incorrect rejection in terms of substantive testing?

   A. The auditor concludes balance is materially correct when in actual fact it is not
   B. The auditor concludes that the balance is materially misstated when in actual fact it not
   C. The auditor has rejected an item for sample which was material
   D. None of the above

2. In an audit of financial statements, substantive tests are audit procedures that __________?

   A. May be eliminated for an account balance under certain conditions
   B. Are designed to discover significant subsequent events
   C. Will increase proportionately when the auditor decreases the assessed level of control risk
   D. May be test of transactions, test of balance and analytical procedures

3. _______the audit risk,_______the materiality and _______the audit effort?

   A. Lower, Higher, Lower
   B. Lower, Lower, Higher
   C. Higher, Lower, Lower
   D. Lower, Higher, Higher

4. The nature, timing and extent of substantive procedures is related to assessed level of control risk

   A. Randomly
   B. Disproportionately
   C. Directly
   D. Inversely

5. ______the audit risks_______the materiality and_________the audit effort.

   A. Lower, Higher, Lower
   B. Lower, Lower, Higher
   C. Higher, Lower, Lower
   D. Lower, Higher, Higher

6. For what minimum period should audit working papers be retained by audit firm?

   A. For the time period the entity remains a client of the audit firm.
   B. For a period of ten years
   C. For a period auditor opines them to be useful in servicing the client
   D. For the period the audit firm is in existence.

7. Audit risk is composed of 3 factors. Which of the following is NOT one of those factors?

   A. Compliance risk
   B. Detection risk
   C. Control risk
   D. Inherent risk

8. An auditor should not accept a loan on favourable commercial terms from an audit client because of the threat to his or her independence. The threat would be a___________?

   A. Self-interest threat
   B. Self-review threat
   C. Advocacy threat
   D. Familiarity threat

9. Which of the following statements is most closely associated with analytical procedure applied at substantive stage?

   A. It helps to study relationship among balance sheet accounts
   B. It helps to discover material misstatements in the financial statements
   C. It helps to identify possible oversights
   D. It helps to accumulate evidence supporting the validity of a specific account balance

10. Which of the following statements is most closely associated with analytical procedure applied at substantive stage?

    A. It helps to study relationship among balance sheet accounts
    B. It helps to discover material misstatements in the financial statements
    C. It helps to identify possible oversights
    D. It helps to accumulate evidence supporting the validity of a specific account balance