June 09 - F8 Bit Session 9

[siddharth]

Hi,

This week’s topic is Designing substantive procedures

1. Which of the following is the only risk that can be manipulated by the auditors

a. control risk
b. Detection risk
c. Inherent risk
d. Sampling risk

2. If the acceptable level of detection risk decreases, the assurance directly provided from

a. substantive procedures should increase
b. substantive procedures should decrease
c. tests of control should increase
d. tests of control should decrease

3. The auditor assesses control risk because it

a. includes the aspects of non-sampling risk that are controllable
b. indicates where inherent risk may be the greatest
c. affects the level of detection risk the auditor may accept
d. needs to be reported on in the auditor’s report

4. The auditor is more likely to use analytical review a substantive test when

a. planned detection risk is high
b. inherent risk is assessed as high
c. control risk is assessed as low
d. planned audit risk is high.

[Asif]

1- B
2 - na
3 C
4 b

[ManOo]

1 b
2 b
3 c
4 c

[Suze]

Hi Asif

is your answer to 2 A?

[Suze]

Here are my answers:

1. b - the 3 components of audit risk is IR CR and DR. The auditor manages overall AR by manipulating DR

2. b - DR is the risk that auditors will NOT detect detect material misstatements, therefore if detection risk decreases then the assurance directly provided from substantive procedures should decrease.

3. c - The higher the CR the lower the DR hence a more substantial amount of substantive testing will have to be done

4. c - When CR is high, auditors may rely more on tests of individual transactions or balances than analytical procedures, therefore whem CR is low it will be more likely that the use of analytical review will be used as a substantive test

[Suze]

Hello Sid and others,

Please add to my explanations.

Suze

[Suze]

Hi Sid

Where are you? I hope everything is ok with you.

I am sure we all are anxiously awaiting your post with the correct answers.

[Suze]

Hello Siddharth,

I am anxiously awaiting the answers to the questions and also More questions.

Hope to see your response before the day is out.

[siddharth]

Hi Suze,

I am not in a position to post further questions in this month.

I will come back shortly and continue the sessions

Thank you for your support and cooperation

[Suze]

Hi Suze,

I am not in a position to post further questions in this month.

I will come back shortly and continue the sessions

Thank you for your support and cooperation

:confused: Ok. I am really missing the sessions. Can't wait for you to come back.

stay well

[Camille]

Hey, these are my answers
1 b
2 b
3 c
4 c