The Auditor Has to Develop an Audit Plan That Responds

question 50

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 estimate the risk of material misstatement at the financial statement and assertion level
• B)the nature,timing,and extent of audit procedures to respond to 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:

Co-pays

Fixed amounts paid by patients for healthcare services at the time of service, with the balance covered by insurance.

Deductibles

Deductibles are the amount paid out of pocket by the policyholder before an insurance provider pays any expenses.

Moral Hazard

The risk that one party to a contract can change their behavior to the detriment of the other party once the contract has been executed.

Asymmetric Information

A situation where one party in a transaction has more or superior information compared to another.