Audit Risk Model & Planning Phase Summary: Assessing risks & factors in audit client acceptance & planning.

Question 1

What is the main purpose of the systematic process of accumulating & evaluating evidence to assess the degree of correspondence?

Accepted Answer

To assess the risk of material misstatement

Question 2

What are the reasons for auditing in the acceptance of an audit client?

Accepted Answer

Question 3

What is included in the engagement letter during the acceptance of an audit client?

Accepted Answer

Applicable financial reporting framework

Question 4

What does the audit risk model formula DR = AAR / (IR x CR) calculate?

Accepted Answer

Risk of material misstatement

Question 5

What is the key component in the Audit Risk Model formula?

Accepted Answer

Acceptable Audit Risk

Question 6

What is the main focus in the planning phase of an audit?

Accepted Answer

Determining audit fees

Question 7

What is the assessment of risk of material misstatement based on in the planning phase?

Accepted Answer

Question 8

What does the audit risk model help determine in the planning phase of an audit?

Accepted Answer

Question 9

What is the main factor that affects the detection risk in the audit risk model formula?

Accepted Answer

Question 10

What is the accepted audit risk based on in the audit risk model formula?

Accepted Answer

Detection risk