Answer Each of the Following

question 6

Essay

Answer each of the following:
1.Control risk has been assessed as high and detection risk is low. What is the timing of the substantive procedures likely to be?
2.The auditor has decided that they will use a larger sample for confirmations at year end. What is the level of detection risk?
3.Control risk has been assessed as low and detection risk is high. What type of substantive procedures are the auditors more likely to use?
4.Control risk has been assessed as low and detection risk is high. What size sample are the auditors more likely to use?
5.The auditor has decided that they will do more tests of details of balances and use larger samples. What is the likely level of control risk?
6.The auditor has been comparing the customer closing balances with the balance in the control account for a large sample of customers at year end. What is the level of control risk and detection risk?

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Definitions:

Operating Cash Flow

The cash generated from the normal operating activities of a business, reflecting its ability to generate sufficient cash to fund its operations.

Variable Cost

Expenditures that fluctuate based on the volume of goods or services provided by a business.

Cash Break-Even

The point at which a company's cash inflows match its cash outflows, indicating no net gain or loss.

Fixed Costs

Costs that do not vary with the level of production or sales, remaining constant regardless of business activity levels.