12. The achieved (actual) level of audit risk A. Can always be accurately assessed by the auditor B. Should be greater than or equal to acceptable audit risk C. Can never be known with certainty D. Is the same for all audit clients AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Risk Analysis Difficulty: Moderate Learning Objective: 1 13. An auditor that an audit client operates in an industry in which common stock is valued based on the price-earnings ratio soon will have an initial public offering. All of the following are true except: A. Materiality should be reduced B. Risk of material misstatement should increase C. Fraud risk should increase D. Audit risk should increase AACSB: Analytic AICPA BB: Industry AICPA FN: Risk Analysis Difficulty: Moderate Learning Objective: 11 Learning Objective: 2 Learning Objective: 3 Learning Objective: 6 14. The risk that an auditor will conclude, on substantive procedures, that a material error does not exist in an account balance when, in fact, such error does exist is referred to as A. Sampling risk B. Detection risk C. Nonsampling risk D. Inherent risk AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Risk Analysis Difficulty: Moderate Learning Objective: 2 Learning Objective: 3 Learning Objective: 6
12. The achieved (actual) level of audit risk A. Can always be accurately assessed by the auditor B. Should be greater than or equal to acceptable audit risk C. Can never be known with certainty D. Is the same for all audit clients AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Risk Analysis Difficulty: Moderate Learning Objective: 1 13. An auditor that an audit client operates in an industry in which common stock is valued based on the price-earnings ratio soon will have an initial public offering. All of the following are true except: A. Materiality should be reduced B. Risk of material misstatement should increase C. Fraud risk should increase D. Audit risk should increase AACSB: Analytic AICPA BB: Industry AICPA FN: Risk Analysis Difficulty: Moderate Learning Objective: 11 Learning Objective: 2 Learning Objective: 3 Learning Objective: 6 14. The risk that an auditor will conclude, on substantive procedures, that a material error does not exist in an account balance when, in fact, such error does exist is referred to as A. Sampling risk B. Detection risk C. Nonsampling risk D. Inherent risk AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Risk Analysis Difficulty: Moderate Learning Objective: 2 Learning Objective: 3 Learning Objective: 6
Test-Bank-Auditing-and-Assurance-Services-6th-Edition-Messier.docx