An auditor must consider both acceptable audit risk and inherent risk when planning an audit.These two types of risk affect the:

Amount of evidence that needs to be gathered and staffing

Amount the auditor pays to the client's attorney and reporting

Cost and the amount of the client's staff that can be employed by the auditor

Types of auditing standards the auditor chooses to use

One of the instruments an auditor may use duringthe audit process is an internal control questionnaire. The purpose of an internal control questionnaire is

To determine if management has written internal control procedures

To determine if the company has answered all of the SEC questions during their 10-K audit

To show that the auditor has followed generally accepted auditing standards during the course of the audit

To uncover aspects of internal control that may be inadequate

An auditor selects the type of tests to perform, when planning an audit.The type of test represented by a calculation of a current ratio for the client would be:

Analytical procedures

Test of internal controls

Substantive tests of transactions

Test of details of balance

Auditing includes the concept of materiality.Which of the following would be considered material?

The auditor confirms accounts receivable and notices one company has not sent in the confirmation form

The auditor discovers a $200 error in the inventory account balance of $500,000

The auditor discovers related-party transactions are not recorded

The auditor notices the name of the new CEO, hired in January 20x2 is not included in the annual report for 20x1

An auditor must consider both acceptable audit risk and inherent risk when planning an audit.These two types of risk affect the:

Amount of evidence that needs to be gathered and staffing

Amount the auditor pays to the client's attorney and reporting

Cost and the amount of the client's staff that can be employed by the auditor

Types of auditing standards the auditor chooses to use

One of the instruments an auditor may use duringthe audit process is an internal control questionnaire. The purpose of an internal control questionnaire is

To determine if management has written internal control procedures

To determine if the company has answered all of the SEC questions during their 10-K audit

To show that the auditor has followed generally accepted auditing standards during the course of the audit

To uncover aspects of internal control that may be inadequate

An auditor selects the type of tests to perform, when planning an audit.The type of test represented by a calculation of a current ratio for the client would be:

Analytical procedures

Test of internal controls

Substantive tests of transactions

Test of details of balances

Auditing includes the concept of materiality.Which of the following would be considered material?

The auditor confirms accounts receivable and notices one company has not sent in the confirmation form

The auditor discovers a $200 error in the inventory account balance of $500,000

The auditor discovers related-party transactions are not recorded

The auditor notices the name of the new CEO, hired in January 20x2 is not included in the annual report for 20x1