Question: 11. Consider the following statement: When inherent and control risk are assessed as high, the risk of material misstatement is assessed as high, and an

11.   Consider the following statement: “When inherent and

control risk are assessed as high, the risk of material misstatement is

assessed as high, and an auditor will set detection risk as low to reduce

audit risk to an acceptably low level.” Explain what it means to set detection

risk as low. What does this mean for the operation of the audit?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

Q:

Consider the following statement: When inherent and control risk are assessed as high, the risk of material misstatement is assessed as high, and an auditor will set detection risk as low to reduce...

Q:

Consider the following statement: "If inherent and control risk is high, the auditor will set detection risk as low, to bring audit risk down." Explain how setting detection risk as low brings down...

Q:

The risk of material misstatement is composed of which audit risk components? a. Inherent risk and control risk. b. Control risk and detection risk. c. Inherent risk and detection risk. d. Inherent...

Q:

Consider the following statement: If inherent and control risk are high, the auditor will set detection risk as low to maintain a low audit risk. Explain what it means to set detection risk as low....

Q:

Analytical procedures: (a) Are less efficient than substantive testing of details. (b) Place less reliance on the clients accounting records than substantive testing of details. (c) Are relied on to...

Q:

Audit risk should be considered when planning and performing an audit of financial statements in accordance with generally accepted auditing standards. a. Define audit risk. b. Describe its...

Q:

On pages 279-280 are statements of earnings and financial position for Wexler Industries. Required a. Use professional judgment in deciding on the preliminary judgment about materiality for earnings,...

Q:

As an example of difficulties that auditors experience in collecting confirmations of cash balances, consider the Parma at fraud. In that case, the company overstated cash by about $5 billion, which...

Q:

The auditors of Landi Corporation wish to use a structured approach to nonstatistical sampling to evaluate the reasonableness of the accounts receivable. Landi has 15,000 receivable accounts with a...

Q:

What is the directional relationship between the risks of material misstatement (inherent and control risk) and both audit risk and detection risk? In other words, if the risks of material...

Q:

Determine whether the quantitative variable is discrete or continuous. Number of cars owned Is the variable discrete or continuous? A. The variable is continuous because it is countable. OB. The...

Q:

Number of classes: 5 Data set: The heights (to the nearest inch) of 30 males Construct a frequency distribution and a frequency histogram for the data set using the indicated number of classes....

Q:

lim x 0 ( 1 3 * 3 x + 2 3 * 2 x ) 1 x

Q:

Explain, with appropriate figures, the culture models that underlie the three different culture perspectives discussed in the class: the national-different cultures perspective; the national-...

Q:

Explain why hospital probiders devote so much of their time to macimizing their bond ratings. Explain how their efforts can affect their P/L expenses.

Q:

A. Explain the key drivers of financial risks inherent in the motor vehicle industry where Toyota operates. [5 Marks] B. Critically analyse how Toyota has managed to use financial instruments to...

Q:

1) Explain in details why a function is performed on the data to produce a code when data are to be written into memory? 2) Give 2 examples to explain the pipelining and another to explain the Data...

Q:

In the 2001 Australian film The Bank, a bank CEO has hold of research suggesting with certainty that a massive stock market crash is about to occur. Rather than publicise the advice he suggests the...

Q:

Determine the number of lone pairs around the central atom for SF4 . Express your answer as an integer. Activate to select the appropriates template from the following choices. Operate up and down...

Q:

11. Consider the following statement from Nike (source): Does this indicate a move towards a pull strategy or a push strategy? (Highlight one answer) a. Pull strategy b. Push strategy

Q:

I'm having trouble approaching these, for question 7 on the part where it says: the truth value of the inverse statement: answers choices include: false, true, not neccasirly true Preview File Edit...

Q:

Question 1: Probability concepts and application [20] 1.1 .Consider the following random statement: \"I'm 110% sure that I will complete my MBA degree in 2022\" Using the basic laws of probability,...

Q:

Find a mathematical model for the verbal statement. (Use k for the constant of proportionality.) h varies directly as the square root of s. S Find a mathematical model for the verbal statement. (Use...

Q:

n = 100 random samples of water from a fresh water lake were taken and the calcium concentration (milligrams per liter) measured. A 95% CI on the mean calcium concentration is 0.49

Q:

1. Basic concepts During the wake of the financial crisis, Ben Bernanke, chairman of the Federal Reserve, said that "shortening the cash cycle and better use of working capital" are the most...