Chapter 3 Section 9: Responding to the Assessed Risks of Material Misstatement Flashcards
1
Q
What needs to be planned to respond to risk at the relevant assertion level?
A
Nature
Extent
Timing
2
Q
When is a purely substantive approach used?
A
When control risk is assessed at maximum - there are no effective controls or it wouldn’t be efficient to test them
3
Q
When may tests of controls be required?
A
For IT
4
Q
When should tests of controls be used?
A
IT
Strong internal controls, where testing would be effective
5
Q
Is inquiry sufficient for tests of controls?
A
No
6
Q
What is the audit evidence hierarchy?
AEIOU
A
Auditor knowledge External evidence Internal evidence Oral evidence U know it
7
Q
What do substantive procedures look at?
A
Dollar balances
Analytical procedures
Ratios
