The Auditor Has to Develop an Audit Plan That Responds

question 127

Multiple Choice

The auditor has to develop an audit plan that responds to the risks of material misstatement identified in the prior steps of the audit process.The auditing standards require the auditor to develop an audit plan that includes which of the following elements?

• A)the nature,timing,and extent of planned risk assessment procedures to allow the auditor to identify the risk of material misstatement at the financial statement and assertion level
• B)the nature,timing,and extent of audit procedures to establish the assessed risks of material misstatement at the relevant assertion level
• C)the nature,timing,and extent of audit procedures to test the effectiveness of internal controls
• D)other audit procedures that need to be done to allow the auditor to comply with generally accepted accounting principles

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Definitions:

Average Tax Rate

The average tax rate is the percentage of total income that an individual or corporation pays in taxes, calculated by dividing total tax paid by total income.

Marginal Tax Rate

The rate at which the last dollar of income is taxed, reflecting the rate applied to each additional dollar of income.

Social Security Tax

A payroll tax collected to fund the Social Security program, which provides benefits to retirees, disabled individuals, and survivors.

Taxable Income

The portion of income subject to tax by the government after all deductions and exemptions.