Reference no: EM132556588

Question 1: Audit risks for particular accounts can be expressed in the model: Audit risk (AR) = Inherent risk (IR) x Internal control risk (CR) x Detection risk (DR).

A. If an audit risk is set at 5 percent, the inherent risk at 80 percent, and the internal control risk at 25 percent, what would be the detection risk?

B. If the audit team wanted to reduce the audit risk to 1 percent, what would be the detection risk?

C. What would the audit team have to do to reduce the audit risk?

Question 2: D. Jackson, CPA, audited Washington Company's financial statements for the year ended December 31, 2015. On November 1, 2016, Washington notified Jackson that it was changing auditors and that Jackson's services were being terminated. On November 5, 2016, Washington invited Lincoln, CPA, to make a proposal for an engagement to audit its financial statements for the year ended December 31, 2016.

What procedures concerning Jackson should Lincoln perform before accepting the engagement?

Question 3:  In each of the circumstances listed below, indicate, by appropriate letter,

Which of the following types of opinions should be rendered on the entity's financial statements?

A. Unmodified
B. Qualified
C. Adverse
D. Disclaimer