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:

Financial Planning

Financial planning is the process of creating strategies for managing financial affairs and meeting life goals through the proper management of finances.

Cash Inflows

Money received by a company from its operational activities, investments, or financing.

Cumulative Cash Deficit

The total amount by which a company's cash outflows exceed its cash inflows over a certain period, indicating a need for additional financing or cost reductions.

External Funding

Capital that comes from outside of a company, including loans, lines of credit, or equity investments from external investors.