A staff auditor was listening to a conversation between two senior auditors regarding the audit risk model. Following are some statements made in that conversation regarding the audit risk model.
Indicate whether you agree or disagree with each of the statements. Present the rationale for your answer.
Indicate whether you agree or disagree with each of the statements. Present the rationale for your answer. (Short but direct Rationale, I am preparing for a similar test and want to review the subject)
1. Audit risk can be applied quantitatively or qualitatively. In essence, it is a concept used to ensure that the auditor gathers sufficient evidence to render an opinion on the financial statements with little likelihood of being wrong. Agree. The audit risk is the hazard of the auditor providing an inappropriate opinion on the financial statements. For instance, he says that the statements provide a fair position of the business when they do not do.
2. Setting audit risk at 5 percent is a valid setting for controlling audit risk at a low level only if the auditor assumes that inherent risk is 100 percent, or significantly greater than the real level of ...
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