Question 7 (3 points) Which of the following is TRUE about the audit risk model (holding all other components constant)? An increase in acceptable audit risk will result in a decrease in detection risk. O A decrease in control risk will result in an increase in planned audit evidence. An increase in detection risk will result in an increase in planned audit evidence. O A decrease in inherent risk will result in a decrease in planned audit evidence. Question 8 (3 points) Because of high turnover of staff in an audit firm, all of the staff working on the engagement this year will be new to this client (i.e. none of the personnel who worked on the engagement last year are returning to the engagement this year). This would be most likely to affect the: inherent risk control risk detection risk sampling risk Question 9 (3 points) ShopCo operates a members-only retail chain of low cost discount merchandise stores. During the current year, the company decided to add jewelry departments to all of its stores. The jewelry departments carry a variety of items including wedding and diamond engagement rings. In the risk assessment process, this would most likely affect the auditor's assessment of: O inherent risk Ononsampling risk detection risk O sampling risk none of the above Question 10 (3 points) During the risk assessment process, an auditor discovers the following fact: During the current year being audited, a new management bonus plan was implemented by the company. Under this plan, top management can earn bonuses equal to their annual salary if they meet specified earnings targets. In the risk assessment process, this would most likely affect the auditor's assessment of: O inherent risk control risk detection risk engagement risk none of the above Question 11 (3 points) Which of the following statements about audit evidence and audit procedures is NOT correct? To test for completeness, an auditor would vouch entries from the journal to underlying documents. Confirmations are often used to verify cash balances and accounts receivable. Recalculation consists of checking the mathematical accuracy of documents or records. The direction of testing is important when testing for occurrence Recalculation is generally more reliable than observation