Which Of The Following Factors Most Likely Would Preclude A CPA From Accepting A New Audit Engagement?

Which of the following factors most likely would preclude a CPA from accepting a new audit engagement? Which of the following factors most likely would cause a CPA to not accept a new audit engagement? The prospective client has already completed its physical inventory count. The prospective client is unwilling to make all financial records available to the CPA.

Which of the following circumstances most likely would cause an auditor to consider whether material misstatements exist in an entity's financial statements?

Which of the following circumstances most likely will cause an auditor to consider whether material misstatements due to fraud exist in an entity's financial statements? Transactions selected for testing are not supported by proper documentation.

Which of the following factors is least likely to affect the extent of the auditor's understanding of the entity's internal controls?

Which of the following factors is least likely to affect the extent of the auditor's understanding of the entity's internal controls? The amount of time budgeted to complete the engagement. Document the auditor's understanding of the entity's internal control components.

Which of the following risk factors indicates an increased risk of misappropriation of assets?

Which of the following risk factors indicates an increased risk of misappropriation of assets? High turnover of senior management. Strained relationships between management and auditors.

Which of the following most likely would be included in an audit engagement letter?

An auditor's engagement letter most likely will include: Management's acknowledgment of its responsibility for maintaining effective internal control.


Related guide for Which Of The Following Factors Most Likely Would Preclude A CPA From Accepting A New Audit Engagement?


Which of the following conditions most likely would pose the greatest risk in accepting a new integrated audit engagement?

Which of the following conditions most likely would pose the greatest risk in accepting a new integrated audit engagement? Staff will need to be rescheduled to cover this new client.


Which component of audit risk can the auditor control?

The auditor can control detection risk and audit risk. Audit risk is set and held at a constant number, and detection risk is a calculated number from the audit risk amount.


Which of the following an auditor would be the most interested in when determining whether accounting estimates made by management are reasonable?

When evaluating whether accounting estimates made by management are reasonable, auditors would be most interested in: Evidence of a conservative systematic bias. An audit committee is: Composed of members of a company's board of directors who are not involved in the day-to-day operations of the company.


Which of the following situations most likely represents the highest risk of a material misstatement arising from misappropriation of assets?

Which of the following situations most likely represents the highest risk of a misstatement arising from misappropriations of assets? A large number of bearer bonds on hand represents the highest risk of a misstatement arising from misappropriations of assets.


Which of the following factors is most likely to affect the extent of the documentation of the auditor's understanding?

Which of the following factors is most likely to affect the extent of the documentation of the auditor's understanding of a client's system of internal controls? The degree to which information technology is used in the accounting function.


Which of the following is least considered if the auditor has to determine whether specialized CIS skills are needed in an audit?

59 Cards in this Set

Which statement is incorrect when auditing in a CIS environment? d
Which of the following is least considered if the auditor has to determine whether specialized CIS skills are needed in an audit? d
Which of the following least likely indicates a complexity of computer processing? d

Which of the following would be most likely to raise a question concerning possible illegal acts?

Large checks payable to cash would be most likely to raise questions regarding possible illegal acts. Valid company disbursements are typically made by check and controlled through accounts payable. Cash payments are unusual and difficult to control.


Which of the following situations represents a risk factor that relates to misstatements arising from misappropriation of assets?

Which of the following situations represents a risk factor that relates to misstatements arising from misappropriation of assets? A lack of independent checks. Which of the following procedures is the auditor most likely to perform after accepting an initial audit engagement?


Which of the following is an example of misappropriation of assets?

Examples of asset misappropriation include theft of cash on hand and receipts, fraudulent disbursements, and misuse of inventory and assets.


Which of the following is a category of risk factors that should be considered when assessing risk of misstatements arising from misappropriation of assets?

Lack of job applicant screening procedures relating to employees with access to assets susceptible to misappropriation. Inadequate record keeping within respect to assets susceptible to misappropriation. Lack of appropriate segregation of duties or independent checks.


Which of the following factors would most likely cause an auditor not to accept?

Which of the following factors most likely would cause an auditor not to accept a new audit engagement? An inadequate understanding of the entity's internal controls. The close proximity to the end of the entity's fiscal year. Concluding that the entity's management probably lacks integrity.


Which of the following conditions or events most likely would cause an auditor to have substantial doubt about an Entitys ability to continue as a going concern?

4. events disclosed in the financial statements cause the auditor to have substantial doubt about the entity's ability to continue as a going concern.


Which of the following audit risk components may be assessed in quantitative terms?

All 3 components of audit risk may be assessed in quantitative terms such as percentages or in nonquantitative terms that range, for example, from high to low. A Risk of failing to discover material misstatements. B Assurance provided by substantive procedures. C Risk of misapplying auditing procedures.


What is detection risk affected by?

Detection risk is affected by (1) the effectiveness of the substantive procedures and (2) their application by the auditor, i.e., whether the procedures were performed with due professional care.


When control risk and inherent risk is high detection risk is?

Because audit risk is comprised of all three elements, if both control risk and inherent risk are high, detection risk will need to be minimized through increased audit procedures. If inherent risk and control risk are both low, the level of audit procedures required will be lower.


How do you identify audit risk?

  • Don't be afraid to ask questions.
  • Know your client's industry and their transaction cycles.
  • Identify your client's controls.
  • Evaluate the design and implementation of your client's controls.
  • Tracy Harding, CPA, Principal, BerryDunn.

  • What are the 3 factors of audit risk?

    From an auditor's viewpoint, the three components of audit risk are inherent risk, control risk and detection risk.


    Which type of risk does the auditor have greatest control?

    The first is control risk, which is the risk that potential material misstatement would not be detected or prevented by a client's control systems. The second is detection risk, which is the risk that the audit procedures used are not capable of detecting a material misstatement.


    What are risk factors in auditing?

    There are three common types of audit risks, which are detection risks, control risks and inherent risks. This means that the auditor fails to detect the misstatements and errors in the company's financial statement, and as a result, they issue a wrong opinion on those statements.


    In which of the following circumstances would an auditor be most likely to express an adverse?

    In which of the following circumstances would auditors be most likely to express an adverse opinion? The financial statements are not in accordance with generally accepted accounting principles regarding the capitalization of leases. modify the Auditor's Responsibility section to identify the basis for the disclaimer.


    What inherent risk factors should an auditor consider when auditing the revenue process of a computer manufacturer?

    In the case of a computer manufacturer, there are two risk factors an auditor should consider while auditing the revenue process: industry-related factors and technological change.


    Which of the following key factors and assumptions would an auditor normally concentrate on when evaluating the reasonableness of an estimate?

    In evaluating the reasonableness of an estimate, an auditor would normally concentrate on key factors and assumptions that are (1) significant to the accounting estimate, (2) sensitive to variations, (3) deviations from historical patterns, or (4) subjective and susceptible to misstatements and bias.


    Which of the following constitutes a potential risk associated with the use of information technology in an entity's internal control structure?

    Which of the following constitutes a potential risk associated with the use of information technology in an entity's internal control structure? Unauthorized changes to systems. An auditor is concerned about a policy of management override as a limitation of internal control.


    Which component of audit risk can the auditor control?

    The auditor can control detection risk and audit risk. Audit risk is set and held at a constant number, and detection risk is a calculated number from the audit risk amount.


    Which of the following factors is least likely to affect the extent of the auditor's understanding of the entity's internal controls?

    Which of the following factors is least likely to affect the extent of the auditor's understanding of the entity's internal controls? The amount of time budgeted to complete the engagement. Document the auditor's understanding of the entity's internal control components.


    Which of the following risk factors indicates an increased risk of misappropriation of assets?

    Which of the following risk factors indicates an increased risk of misappropriation of assets? High turnover of senior management. Strained relationships between management and auditors.


    Which of the following is least considered if the auditor has to determine whether?

    59 Cards in this Set

    Which statement is incorrect when auditing in a CIS environment? d
    Which of the following is least considered if the auditor has to determine whether specialized CIS skills are needed in an audit? d
    Which of the following least likely indicates a complexity of computer processing? d

    Which of following will not affect audit in a CIS environment?

    Evaluation of inherent risk and control risk.


    Which of the following factors is most likely to affect the extent of the documentation of the auditor's understanding of a client's system of internal controls?

    Which of the following factors is most likely to affect the extent of the documentation of the auditor's understanding of a client's system of internal controls? The degree to which information technology is used in the accounting function.


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