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Auditing Solutions

Agree or disagree? if disagree, please give simple explanation

1. Attribute sampling estimates the proportion of items that contain a percentage of error and can be used in tests of balances.

2. In applying the concept of materiality, the auditor must identify misstatements from the sample selected, calculate likely misstatement by projecting those results to the population and then decide if likely misstatement exceeds materiality.

3. An ethical dilemma is one in which the choice of alternative actions affects the well being of only the person faced with the decision.

4. The four phases of the audit must be conducted by separate staff members in the audit firm in order to achieve independence in appearance.

5. An auditor can possibly use negligence as a defense in a lawsuit. In a case where a third party has been harmed by the bankruptcy of the client, but the shareholders have suffered no loss it would be appropriate. This is because the auditor has a lack of duty to that party.

multiple choice question:
1.An auditor selected a sample of receiving reports and vouched them to the related purchase orders. Which of the following objectives was most likely being tested?
A) Existence
B) Classification
C) Authorization
D) Completeness

2.While conducting analytical procedures during the planning stage of the audit, comparing the audit year to previous years, an auditor found that both accounts receivable and days' sales in receivables had increased. Given this evidence, which management assertion would the auditor most likely be concerned with?
A) Existence
B) Valuation
C) Completeness
D) Ownership

3.If the auditor decreases the amount of error considered material, how would this affect the various kinds of risk used in the audit risk model?
A) The assessed level of inherent risk and control risk would increase.
B) Detection risk would increase
C) Audit risk would increase
D) Inherent risk would increase but control risk would be unchanged.

Thank you. :)

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Auditing Questions

1. Attribute sampling estimates the proportion of items that contain a percentage of error and can be used in tests of balances.

False - attribute estimation sampling is a statistical method that is used to estimate the most likely and maximum rate of control procedure failures based on selecting and auditing one sample. Most often in statistical analysis an attribute is a control procedure, but it could also be an operational aspect, such as promptly responding to customer inquiries, with a single attribute being the characteristic of a particular population that is of interest to the auditor.

2. In applying the concept of materiality, the auditor must identify misstatements from the sample ...

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