The Audit Risk Model Is a Theoretical Model Designed to Guide

question 61

Multiple Choice

The audit risk model is a theoretical model designed to guide the decision process of the auditor.The model could be used as an equation to calculate detection risk,but it is probably more useful to think of the model as expressing relationships among the risks included in the model.Some of these relationships include

• A)A higher risk of material misstatement will result in a lower detection risk.A lower detection risk means that the auditor will gather less substantive evidence.
• B)Substantive testing is usually done because the risk of material misstatement will usually be zero.Detection risk determines how much substantive testing will be done.
• C)A lower detection risk means that more control testing has been done.
• D)A lower detection risk will result in that more substantive testing is done.

Understand the significance of contextual influences on perception, such as perceptual set and stereotypes.

Appreciate the historical and theoretical perspectives on perception, specifically the nature versus nurture debate in perceptual development.

Discern the mechanisms behind and implications of perceptual adaptation.

Recognize the importance of perceptual organization in interpreting sensory information.

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Definitions:

Capacity

The maximum amount that something can contain or produce, often referred to in terms of production capability or volume storage.

Goods And Services

Products and activities offered for sale, including tangible items (goods) and intangible assistance or expertise (services).

Developing Countries

Nations with a lower level of industrialization, lower standard of living, and lower Human Development Index than developed countries.

Former Soviet Union

Refers to the federation of socialist republics that existed from 1922 to 1991, comprising Russia and other neighboring countries.