Reference no: EM132781277

Problem 1: Senior managers of Mega Corp. are entitled to receive large bonuses if they achieve earnings targets. What is the effect of this on the risks associated with recording of? revenue?

A. It decreases fraud risks associated with revenue.

B. It increases fraud risks associated with revenue.

C. It increases detection risks associated with revenue.

D. It decreases control risks associated with revenue.

Problem 2: What audit procedure would be an? auditor's response to address management override of controls? ?

A. Evaluate systematic processing of large volumes of day-to-day ordinary transactions.

B. Evaluate in detail payroll transactions.

C. Evaluate business rationale for significant unusual transactions.

D. Evaluate possibilities of petty cash embezzlements.

Problem 3: Acceptable audit risk is a measure of

A. the? auditor's assessment of the likelihood that a material misstatement might occur in the first place.

B. how willing the auditor is to accept that the financial statements may be materially misstated after the audit is completed.

C. the probability that the financial statements contain errors.

D. the probability that errors in the financial statements that were not detected by the internal controls of the firm are not detected by the auditor.

Problem 4: If the auditor assessed the detection risk as? high, the extent of evidence the auditor plans to accumulate is

A. high.

B. medium.

C. low.

D. ?uncertain: more information is needed.