Engagement Failure

Engagement risk is The risk of issuing an incorrect audit opinion. The auditor's risk of loss from events arising in connection with financial statements audited and reported upon. The overall risk of material misstatement. The risk of the client's financial failure.
Client risk as defined in the text is The auditor's risk of loss from events arising in connection with financial statements audited and reported upon. The overall risk of material misstatement. The risk that audit procedures will fail to detect material misstatements. The risk of the client's financial failure.
Under Statements on Auditing Standards, which of the following would be classified as an error? Misappropriation of assets for the
Client risk as defined in the text is The auditor's risk of loss from events arising in connection with financial statements audited and reported upon. The overall risk of material misstatement. The risk that audit procedures will fail to detect material misstatements. The risk of the client's financial failure.
Under Statements on Auditing Standards, which of the following would be classified as an error? Misappropriation of assets for the benefit of management. Misinterpretation by management of facts that existed when the financial statements were prepared. Preparation of records by employees to cover a fraudulent scheme. Intentional omission of the recording of a transaction to benefit a third party.
When assessing the risk of material misstatement, auditors evaluate the reasonableness of an entity's accounting estimates. An auditor normally would be concerned about assumptions that are Susceptible to bias. Consistent with prior periods. Insensitive to variations. Similar to industry guidelines.
Which of the following characteristics most likely would heighten an auditor's concern about the risk of intentional manipulation of financial
Engagement risk can be eliminated by Establishing policies for client acceptance and continuance. Lowering audit risk. Lowering materiality. Engagement risk cannot be eliminated.
The achieved (actual) level of audit risk Can always be accurately assessed by the auditor. Should be greater than or equal to acceptable audit risk. Can never be known with certainty. Is the same for all audit clients.
An auditor knows that an audit client operating in an industry in which common stock is valued based on the price-earnings ratio will soon make an initial public offering. All of the following are true except: Materiality should be reduced. Risk of material misstatement should increase. Detection risk should increase. Audit risk should increase.
The risk that an auditor will conclude, based on substantive procedures, that a material error does not exist in an account balance when, in fact, such an error does exist is referred to as Sampling risk. Detection risk. Nonsampling risk. Inherent risk.
The risk of material misstatement differs from detection risk in that it Arises from the misapplication of auditing