Tugas Audit Fix Bener Semua PDF

4/22/2020 Materiality and Risks
Materiality and Risks Total points 390/500
MULTIPLE CHOICE
The respondent's email address ([email protected]) was recorded on

submission of this form.
100 of 130 points
Which of the following would an auditor most likely use in determining the 10/10
auditor’s preliminary judgment about materiality? *
The anticipated sample size of the planned substantive tests
The entity’s annual financial statements
The results of the internal control questionnaire
The contents of the management representation letter
Which of the following is not true about materiality judgment? * 10/10
The auditor’s consideration of materiality is influenced by the auditor’s perception of

the needs (importance) of users of financial statements.
The auditor considers materiality only in relation to classes of transactions, account

balances, and disclosures.
Materiality judgments make sure that the auditor gathers sufficient evidential matter
to obtain reasonable assurance about whether the financial statements are free of
material misstatement.
Materiality decisions differ from one audit client to another.
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Why do auditors establish a preliminary judgment about materiality? * 10/10
To determine the appropriate level of audit experience required for the work.
So that the client can know what records to make available to the auditor.
To plan the appropriate audit evidence to accumulate and develop an overall audit
strategy.
To finalize the assessment of control risk.
When auditors allocate the preliminary judgment about materiality to 10/10

account balances, the materiality allocated to any given account balance is
referred to as: *
The materiality range
The error range
Tolerable materiality
Tolerable misstatement
The preliminary judgment about materiality is the _________ amount by which 0/10
the auditor believes the statements could be misstated and still not affect
the decisions of reasonable users. *
Minimum
Maximum
Mean average
Median average
Financial reporting frameworks often discuss the concept of materiality in 0/10

the context of the preparation and presentation of financial statements.
Although financial reporting frameworks may discuss materiality in different
terms, they generally explain that *
Misstatements, including omissions, are considered to be material if they, individually

or in the aggregate, could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial statements
Judgments about materiality are made in the light of surrounding circumstances, and
are affected by the size or nature of a misstatement, or a combination of both
Judgments about matters that are material to users of the financial statements are
based on a consideration of the common financial information needs of users as a
group. The possible effect of misstatements on specific individual users, whose
needs may vary widely, is not considered.
All of the above
Auditors are _____ to decide on the combined amount of misstatements in 10/10

the financial statements that they would consider material early in the audit.
*
Permitted
Required
Not allowed
Strongly encouraged
Materiality should be considered by the auditor when * 10/10
Determining the nature, timing and extent of auditor’s further procedures
Identifying and assessing the risks of material misstatements
Both a and b
Neither a nor b
In considering materiality for planning purposes, an auditor believes that 10/10

misstatements aggregating Rp100,000 would have a material effect on an
entity’s income statement, but that misstatements would have to aggregate
Rp200,000 to materially affect the balance sheet. Ordinarily, it would be
appropriate to design auditing procedures that would be expected to
detect misstatements that aggregate *
Rp100,000
Rp150,000
Rp200,000
Rp300,000
Only the amount of misstatements need to be considered in assessing 0/10

materiality.Both the amount and nature of misstatements need to be
considered in assessing materiality. *
True, True
False, False
False, True
True, False
Determining a materiality level for the financial statements as a whole 10/10

requires the exercise of professional judgment. A percentage is often
applied to a chosen benchmark as a starting point in that determination.
Factors that may affect the identification of an appropriate benchmark
include the following: *
The elements of the financial statements (e.g., assets, liabilities, equity, income,
expenses)
Whether there are items on which the attention of the users of the particular entity’s
financial statements tends to be focused (e.g., for the purpose of evaluating financial
performance users may tend to focus on profit, revenue or net assets);
The nature of the entity, where the entity is at in its life cycle, and the industry and
economic environment in which the entity operates;
All of the above
In audit of financial statements, it is considered in terms of the smallest 10/10

aggregate level of misstatements that could be considered material to any
one of the statements that comprise the financial statements, while in
financial reporting, it provides a threshold or cutoff point rather than being
a primary qualitative characteristic which information must have if it is to be
useful *
Materiality
Reliability
Relevance
Misstatement
Which of the following is least likely to be appropriate as the basis for 10/10
determining the preliminary judgment about materiality in the audit of
financial statements? *
Net income before taxes
Current assets
Owners’ equity
Inventory
Untitled Section 150 of 220 points
Which of the following statements is not true? * 0/10
Inherent risk is inversely related to detection risk.
Inherent risk is inversely related to evidence.
Inherent risk is the susceptibility of the financial statements to material error,

assuming no internal controls.
Inherent risk is the auditor’s assessment of the likelihood that errors exceeding a
tolerable amount exist in a segment before considering the effectiveness of internal
controls.
In the audit risk model, which of the risk components can be assessed by the 0/10
auditor? *
Inherent risk.
Control risk.
Detection risk.
Both A and B.
Inherent risk is often low for an account such as: * 0/10
inventory.
marketable securities.
cash.
accounts receivable.
Which of the following is an incorrect statement? * 0/10
Detection risk cannot be changed at the auditor’s discretion
Detection risk bears an inverse relationship to inherent and control risks
The greater the inherent and control risks the auditor believes exists, the less
detection risk that can be accepted
The auditor might separate or combined assessments of inherent risk and control risk
Inherent risk and control risk differ from detection risk in that inherent risk 10/10
and control risk *
arise from the misapplication of auditing procedures
may be assessed in either quantitative or nonquantitative terms
exist independently of the financial statement audit
can be changed at the auditor’s discretion
Auditors commonly allocate materiality to balance sheet accounts rather 10/10

than income statement accounts because most income statement
misstatements have a(n) _____ effect on the balance sheet. *
Reduced
Equal
Undetermined
Increased
Why should the auditor plan more work on individual accounts as lower 10/10
acceptable levels of both audit risk and materiality are established? *
To find smaller errors.
To find larger errors.
To increase the tolerable error in the accounts.
To decrease the risk of overreliance.
When discussing control risk (CR) and the audit risk model, which of the 10/10
following is false? *
CR is a measure of the auditor’s assessment of the likelihood that misstatements will

not be prevented or detected by internal control
If the auditor concludes that internal control is completely ineffective to prevent or

detect errors, he/she would assign a low value (e.g., 0%) to CR.
The relationship between control risk and detection risk is inverse.
The relationship between control risk and evidence needed to support account
balances is direct.
If an auditor establishes a relatively high level for materiality, then the 10/10
auditor will: *
accumulate more evidence than if a lower level had been set.
accumulate less evidence than if a lower level had been set.
accumulate approximately the same evidence as would be the case were materiality
lower.
accumulate an undetermined amount of evidence
Which of the following best describes the relationship between IR, CR, and 10/10
DR?
DR does not vary from one assertion to another.
IR, CR, and DR vary from assertion to assertion.
IR and CR do not vary from assertion to assertion, but DR does vary from assertion to
assertion.
When IR increases, DR decreases.
Auditing standards _____ that the basis used to determine the preliminary 10/10
judgment about materiality be documented in the audit files. *
Permit
Do not allow
Require
Strongly encourage
Which of the following statements concerning materiality thresholds is 10/10

incorrect? *
Aggregate materiality thresholds are a function of the auditor's preliminary judgments

concerning audit risk.
In general, the more misstatements the auditor expects, the higher should be the
aggregate materiality threshold.
The smallest aggregate level of errors or fraud that could be considered material to
any one of the financial statements is referred to as a "materiality threshold."
Materiality thresholds may change between the planning and review stages of the
audit. These changes may be due to quantitative and/or qualitative factors.
Which of the following statements is true with regard to the relationship 10/10
among audit risk, audit evidence, and materiality? *
The lower the inherent risk and control risk, the lower the aggregate materiality
threshold.
Under conditions of high inherent and control risk, the auditor should place more
emphasis on obtaining external evidence and should reduce reliance on internal
evidence.
Where inherent risk is high and control risk is low, the auditor may safely ignore
inherent risk.
Aggregate materiality thresholds should not change under conditions of changing risk
levels.
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In the audit risk model, its risk components are either determined, assessed, 0/10
or manipulated. Which of the following risks are controllable by the auditor? *
Audit risk.
Control risk.
Detection risk.
Both A and C.
Under which of the following conditions would you consider lowering 0/10
individual item materiality thresholds *
Study of the business and industry, together with the application of analytical
procedures, reveals that the client has enjoyed a surge in sales and gross profit during
an industry downturn.
Application of analytical procedures shows that the client's gross profit rate is
significantly below last year and also is materially lower than the industry average.
Study of internal controls within the revenue cycle reveal material weaknesses.
Study of internal controls within the payroll cycle confirm the auditor's belief that few
errors have occurred.
Which of the following statements is not true regarding audit risk 10/10
assessment? *
The auditor studies the business and industry and applies analytical procedures as a
basis for assessing inherent risk.
When control risk and inherent risk are high, the auditor increases detection risk to
maintain overall audit risk at the desired level.
The auditor studies and evaluates internal control policies and procedures for
assessing control risk.
The auditor designs substantive audit procedures to reduce detection risk to an

acceptable level.
The materiality level for the financial statements as a whole (or the 10/10
materiality level for a particular class of transactions, account balance or
disclosure, if applicable) may need to be revised (adjusted either downward
or upward) as a result of the following *
a change in circumstances that occurred during the audit
new information
a change in the auditor’s understanding of the entity and its operations as a result of
performing further audit procedures.
all of the above
Detection risk is * 10/10
The risk that the auditor gives an inappropriate audit opinion when the financial
statements are materially misstated.
The risk that a misstatement, that could occur in an account balance or class of
transactions and that could be material individually or when aggregated with
misstatements in other balances or classes, will not be prevented or detected and
corrected on a timely basis by the accounting and internal control systems.
The risk that an auditor's substantive procedures will not detect a misstatement that
exists in an account balance or class of transactions that could be material,
individually or when aggregated with misstatements in other balances or classes.
The susceptibility of an account balance or class of transactions to misstatement

that could be material, individually or when aggregated with misstatements in other
balances of classes, assuming that there were no related internal controls.
Assume that control risk = 0.70, inherent risk = 0.80, and audit risk = 0.05. If 10/10
a material misstatement occurred and was not corrected by the auditee’s
internal controls, what is the risk that the misstatement would not be
detected by the audit procedures? *
0.02
0.07
0.09
0.50
Which of the following audit risk components may be assessed in 0/10

nonquantitative terms? 1.Control Risk 2. detection risk 3. inherent risk *
Yes,Yes,Yes
No,Yes,Yes
Yes, Yes,No
Yes, No,Yes
Which is a primary limitation of the audit risk model? * 10/10
The audit risk model does not adequately consider external forces on the client
organization.
Components of audit risk are treated as independent variables even though many
interdependencies exist between them.
The audit technology achieves approximate precision outside of a mathematical

model.
Control risk must be adjusted at the hands of the auditor, not by an arbitrary
estimation.
Audit risk consists of inherent risk, control risk, and detection risk. Which of 10/10
the following statements is true? *
Cash is more susceptible to theft than an inventory of coal because it has a greater
inherent risk.
The risk that material misstatement will not be prevented or detected on a timely
basis by internal control can be reduced to zero by effective controls.
Detection risk is a function of the efficiency of an auditing procedure.
The existing levels of inherent risk, control risk, and detection risk can be changed at
the discretion of the auditor.
Untitled Section 140 of 150 points
Holding other planning considerations equal, a decrease inthe amount of 10/10

misstatement in a class of transactions that anauditor could tolerate most
likely would cause the auditor to *
Apply the planned substantive tests prior to the balance sheet date.
Perform the planned auditing procedures closer to the balance sheet date.
Increase the assessed level of control risk for relevant financial statement assertions.
Decrease the extent of auditing procedures to be applied to the class of transactions.
risk that the sample does not accurately represent the population * 0/10
engagement risk
sampling error
planned detection risk
control risk
Which of the following statements is not correct aboutmateriality? * 10/10
The concept of materiality recognizes that some matters are important for fair
presentation of financial statements in conformity with GAAP, while other matters are
not important.
An auditor considers materiality for planning purposes in terms of the largest

aggregate level of misstatements that could be material to any one of the financial
statements.
Materiality judgments are made in light of surrounding circumstances and necessarily

involve both quantitative and qualitative judgments.
An auditor’s consideration of materiality is influenced by the auditor’s perception of

the needs of a reasonable person who will rely on the financial statements.
When performing a financial statement audit, auditors are required to 10/10

explicitly assess the risk of material misstatement due to *
Errors.
Fraud.
Illegal acts.
Business risk.
Which of the following would an auditor most likely use indetermining the 10/10
auditor’s preliminary judgment about materiality? *
The results of the initial assessment of control risk.
The anticipated sample size for planned substantive tests.
The entity’s financial statements of the prior year.
The assertions that are embodied in the financial statements.
How can the audit program best be described at the beginning of the audit 10/10
process *
Tentative
Conclusive
Comprehensive
Optional
Which of the following is correct concerning performancemateriality on an 10/10

audit? *
It will ordinarily be less than financial statement materiality.
It should be established at beginning of an audit and not be revised thereafter.
It should be established at separate amounts for the various financial statements.
It need not be documented in the working papers.
Which of the following is a function of the risks of materialmisstatement 10/10

and detection risk? *
Internal control.
Corroborating evidence.
Quality control.
Audit risk.
Which of the following journal entries would the auditor least likely examine 10/10
in an effort to address the risk of management override of controls? *
A journal entry made by an individual who does not typically make journal entries.
A journal entry made to a seldom-used account
A journal entry made to record recurring periodic accounting estimates.
A journal entry recorded as a post-closing entry that has no explanation or description
The risk that an auditor will conclude, based on substantive tests, that a 10/10
material misstatement does not exist in an account balance when, in fact,
such misstatement does exist is referred to as *
Sampling risk.
Detection risk.
Nonsampling risk.
Inherent risk.
On the basis of the audit evidence gathered and evaluated,an auditor 10/10
decides to increase the assessed level of control risk from that originally
planned. To achieve an overall audit risk level that is substantially the same
as the planned audit risk level,the auditor would *
Decrease substantive testing.
Decrease detection risk.
Increase inherent risk.
Increase materiality levels.
When issuing an unmodified opinion, the auditor whoevaluates the audit 10/10
findings should be satisfied that the *
Amount of known misstatement is documented in the management representation

letter.
Estimate of the total likely misstatement is less than a material amount.
Amount of known misstatement is acknowledged and recorded by the client.
Estimate of the total likely misstatement includes the adjusting entries already
recorded by the client.
As the acceptable level of detection risk decreases, an auditor may * 10/10
Reduce substantive testing by relying on the assessments of inherent risk and control
risk.
Postpone the planned timing of substantive tests from interim dates to the year-end.
Eliminate the assessed level of inherent risk from consideration as a planning factor.
Lower the assessed level of control risk from the maximum level to below the
maximum.
Relationship between control risk and detection risk is ordinarily * 10/10
Parallel.
Inverse.
Direct.
Equal.
As the acceptable level of detection risk decreases, the assurance directly 10/10
provided from *
Substantive tests should increase.
Substantive tests should decrease.
Tests of controls should increase.
Tests of controls should decrease.
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4/22/2020 Materiality and Risks

Materiality and Risks Total points 390/500

The respondent's email address ([email protected]) was recorded on

100 of 130 points

The anticipated sample size of the planned substantive tests

The entity’s annual financial statements

The results of the internal control questionnaire

The contents of the management representation letter

Which of the following is not true about materiality judgment? * 10/10

The auditor’s consideration of materiality is influenced by the auditor’s perception of

The auditor considers materiality only in relation to classes of transactions, account

Materiality decisions differ from one audit client to another.

Why do auditors establish a preliminary judgment about materiality? * 10/10

To finalize the assessment of control risk.

When auditors allocate the preliminary judgment about materiality to 10/10

The materiality range

The error range

Financial reporting frameworks often discuss the concept of materiality in 0/10

Misstatements, including omissions, are considered to be material if they, individually

All of the above

Auditors are _____ to decide on the combined amount of misstatements in 10/10

Materiality should be considered by the auditor when * 10/10

Determining the nature, timing and extent of auditor’s further procedures

Identifying and assessing the risks of material misstatements

In considering materiality for planning purposes, an auditor believes that 10/10

Only the amount of misstatements need to be considered in assessing 0/10

Determining a materiality level for the financial statements as a whole 10/10

All of the above

In audit of financial statements, it is considered in terms of the smallest 10/10

Net income before taxes

Untitled Section 150 of 220 points

Which of the following statements is not true? * 0/10

Inherent risk is inversely related to detection risk.

Inherent risk is inversely related to evidence.

Inherent risk is the susceptibility of the financial statements to material error,

Inherent risk is often low for an account such as: * 0/10

Which of the following is an incorrect statement? * 0/10

Detection risk cannot be changed at the auditor’s discretion

Detection risk bears an inverse relationship to inherent and control risks

arise from the misapplication of auditing procedures

may be assessed in either quantitative or nonquantitative terms

exist independently of the financial statement audit

can be changed at the auditor’s discretion

Auditors commonly allocate materiality to balance sheet accounts rather 10/10

To find smaller errors.

To find larger errors.

To increase the tolerable error in the accounts.

To decrease the risk of overreliance.

CR is a measure of the auditor’s assessment of the likelihood that misstatements will

If the auditor concludes that internal control is completely ineffective to prevent or

The relationship between control risk and detection risk is inverse.

accumulate more evidence than if a lower level had been set.

accumulate less evidence than if a lower level had been set.

accumulate an undetermined amount of evidence

DR does not vary from one assertion to another.

IR, CR, and DR vary from assertion to assertion.

When IR increases, DR decreases.

Which of the following statements concerning materiality thresholds is 10/10

Aggregate materiality thresholds are a function of the auditor's preliminary judgments

The auditor designs substantive audit procedures to reduce detection risk to an

a change in circumstances that occurred during the audit

all of the above