Reference no: EM132781276

Problem 1: PA has set acceptable audit risk at? 5% and determined that inherent risk and control risk is at? 100%. What is the detection? risk?

A. ?20%

B. ?50%

C. 95%

D. ?5%

Problem 2: Which of the following describes the components of the audit risk model that are used to describe the risk of material misstatement? (RMM)?

A. AAR? / DR

B. IR × DR

C. CR × DR

D. IR × CR

Problem 3: What is the role of internal controls during the assessment of inherent? risk?

A. There is a direct relationship between the quality of internal controls and inherent risk.

B. As the quality of internal controls? improves, inherent risk increases.

C. Internal controls are considered? separately, so they are ignored during the assessment of inherent risk.

D. As the quality of internal controls? increases, inherent risk decreases.

Problem 4: Assessing design effectiveness and conducting tests of controls are required when the auditor

A. chooses to set control risk below 100 percent and relies on the controls.

B. chooses to set control risk below 100 percent even if there is no reliance placed on controls.

C. tests the design effectiveness.

D. is planning the audit.

Problem 5: As the effectiveness of internal control? increases, what happens to control? risk?

A. It stays the same.

B. It decreases.

C. It increases.

D. It changes based on the audit procedures conducted.