AUDIT 1 HW 01

Appropriate audit evidence refers to the a) sufficiency of evidence. b) quantity of evidence. c) materiality of evidence. d) quality of evidence. The maximum amount of misstatement or omission the auditor can tolerate and still issue a clean opinion is known as a) the tolerance level. b) the allowable omission amount. c) materiality. d) the upper limit. What term describes the risk that an auditor may express an inappropriate opinion? a) detection risk b) control risk c) audit risk d) business risk What is the primary reason that users of financial information demand audited financial statements? a) to guarantee a company is a going concern b) to reduce information risk c) to reduce audit risk d) to assess job security Information risk is the risk that a) users rely on incorrect information to make a decision. b) a company is not a going concern. c) auditors do not express the appropriate opinion. d) the internal controls do not provide accurate information. The following are all steps required in the process of a financial statement audit. Identify the order of performing these steps from 1 to 6. 2 devise an audit strategy. 6 an opinion is formed and issued on the financial statements. 5 partner reviews file documentation. 1 perform a risk assessment. 3 perform audit fieldwork. 4 document the work performed and organize all working papers. From the dropdown menu provided, select the engagement that best fits the level of assurance described in the table below. Level of Assurance Low Medium High Compilation Engagement Review Engagement Audit Engagement The auditor is responsible for implementing internal controls and management is responsible for maintaining these internal controls. a) True b) False