Testing for the Level of Risk

Related BrainMass Solutions

• What occurs when the acceptable level of detection risk decreases

  increase the extent of control testing d. increase the extent of substantive testing 14. The auditor uses the assessed level of risk of material misstatement to determine the acceptable level of detection risk for financial statement assertions.

• Assessing the Risk of Material Misstatement

  The audit strategy used for assertion level risk to design further audit procedures that will address the nature, timing and extent of the risk.

• Trade off between substantive testing and testing of control

  That would also be the result if the control risk was at a high level. Pick C. The expert examines the trade offs between substantive testing and testing of control.

• Audit and Risk Assessment

  A risk matrix or the audit risk model can be used to solve for the revised acceptable level of detection risk associated with analytical procedures and tests of details based on the actual assessed levels of inherent and control risk and the auditor's

• (Assessing control risk) An auditor is required to obtain a

  The auditor must document several items, including: 1) The assessed level of control risk for each financial statement assertion; in which case control risk is assessed at the maximum level.

• Managing contingency allowance; risk protection, transfer

  A .05 level of significance indicates that a researcher only allows a 5% error in the process and the researcher wants to be 95% confident of the results. The .05 level of significance is acceptable in social and other related sciences.

• Briefly describe three strategies for testing internal contr

  high level of risk.

• A Discussion on Control Risks

  If this is decided during the planning phase, the substantive testing of balances and transactions is increased to compensate for the lack of controls.

• five step process for hypothesis testing

  Selecting a significance level: the hypothesis is tested n a predetermined level of significance and as such the same should be specified. Generally in practice, either 5% level or 1% level is adopted for purpose.

• Developing responses to assessed risks in terms of testing

  The existence risk is less likely to be an issue for extended testing, but certainly valuation may be. This type of transaction is not much affected by more testing.