QUESTION 14 Which of the following statements about the audit risk model is correct? O A. Client's inherent risk measures to what extent the client's financial statements are susceptible to errors and fraud, and how well the client can identify and correct these errors and fraud themselves. B. Auditors assess the inherent risk, control risk and detection risk to estimate the audit risk, and use the audit risk to determine the level of audit evidence required. OC. When a client has sophisticated internal controls, auditors can completely forgo collection of audit evidence. OD. If a client's internal controls are effective, less audit procedures are required to achieve the same level of audit risk. O E. The audit risk is the risk that auditors issue a qualified or adverse audit opinion to a financial statement that is not materially misstated. QUESTION 16 Sometimes auditors use advice from an expert. For which of the following judgments would an auditor be most likely to use an expert? O A. Estimate sales returns B. Allowance for doubtful debts OC. Evaluate the fair value of a piece of artwork D. Equipment Deprecation O E. Evaluate whether clients' internal controls are effective QUESTION 19 You have found the following information in an audit report. Which section did you find it from? CARRYING VALUE OF EXPLORATION AND EVALUATION ASSETS Area of focus How our audit addressed it The Group has incurred exploration and Our audit procedures included: evaluation costs for exploration projects in Understanding and vouching the underlying Victoria over a number of years. contractual entitlement to explore and evaluate The Group holds the right to explore and each area of interest, including an evaluation of evaluate those projects through tenement and the requirement to renew that tenement at its licence agreements. expir. . There is a risk that the Group may lose its Examining project spend per each area of right to further explore and evaluate those interest and comparing this spend to the areas of interest and therefore amounts minimum expenditure requirements set out in capitalized to the statement of financial the underlying tenement expenditure plan; position from the current and historical Examining project spend to each area of interest periods be no longer recoverable. to ensure that it is directly attributable to that area of interest. O A Other matters B. Emphasis of matter OC Key audit matters Basis of opinion O E. Other information D