The Auditor Uses the Assessed Level of Risk of Material

question 31

Multiple Choice

The auditor uses the assessed level of risk of material misstatement to determine the acceptable level of detection risk for financial statement assertions. As the acceptable level of detection risk decreases, the auditor may do one or more of the following except change the:

• A)nature of substantive tests to more effective procedures.
• B)timing of substantive tests, such as performing them at year-end rather than at an interim date.
• C)extent of substantive tests, such as using larger sample sizes.
• D)assurances provided by substantive tests to a lower level.

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Definitions:

Data

Facts and statistics collected together for reference or analysis.

Information

Data that have been organized so that they have meaning and value to the recipient.

Mainframes

Powerful computers used primarily by large organizations for critical applications, bulk data processing such as census, industry and consumer statistics, enterprise resource planning, and financial transaction processing.

Large Enterprises

Corporations or business entities that operate on a large scale, typically characterized by a significant number of employees or large revenue.