Assume the Preliminary Audit Strategy Was Based on a Planned

question 57

Multiple Choice

Assume the preliminary audit strategy was based on a planned assessed level of control risk at a low level. Based on the final assessed level of control risk, the auditor would need to move substantive tests from interim to year-end and increase the extent of tests of details in order to accommodate a lower acceptable level of detection risk if:

• A) the final assessed level of control risk was moderate or high.
• B) the final assessed level of control risk was low or very low.
• C) the final assessed level of inherent risk was high or very high.
• D) the final assessed level of inherent risk was low or very low.
• E) the final assessed level of analytical procedures risk was moderate of high.

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Definitions:

Coefficient Of Correlation

A statistical measure that quantifies the degree to which two variables' movements are associated, ranging from -1 to 1.

COV

Coefficient of Variation, a standardized measure of the dispersion of a probability distribution or frequency distribution.

Bivariate Distribution

A probability distribution describing two random variables and how their probabilities are distributed over different ranges of values.

Variance

A statistical measurement of the spread between numbers in a data set, indicating how far each number in the set is from the mean.