Solved

Match the Definitions Provided Below with the Correct Term

Question 105

Matching

Match the definitions provided below with the correct term.

Premises:

Responses:

a measure of the risk that the auditor will not detect a misstatement that exists in an assertion that could be material

planned detection risk

the materiality allocated to any given account balance

preliminary judgement about materiality

the risk that the auditor or audit firm will suffer harm because of a client relationship even though the audit report rendered for the client was correct

audit assurance

a measure of the auditor's assessment of the likelihood that misstatements exceeding a tolerable amount in a segment will not be prevented or detected by the client's internal controls

tolerable error

the maximum amount by which the auditor believes that the statements could be misstated and still not affect the economic decisions of users

control risk

a measure of how much risk the auditor is willing to take that the financial statements may be materially misstated after the audit is completed and an unqualified audit opinion has been issued

acceptable audit risk

business risk

inherent risk

materiality

Premises:

a measure of the risk that the auditor will not detect a misstatement that exists in an assertion that could be material

the materiality allocated to any given account balance

the risk that the auditor or audit firm will suffer harm because of a client relationship even though the audit report rendered for the client was correct

a measure of the auditor's assessment of the likelihood that misstatements exceeding a tolerable amount in a segment will not be prevented or detected by the client's internal controls

the maximum amount by which the auditor believes that the statements could be misstated and still not affect the economic decisions of users

a measure of how much risk the auditor is willing to take that the financial statements may be materially misstated after the audit is completed and an unqualified audit opinion has been issued

Responses:

planned detection risk

preliminary judgement about materiality

audit assurance

tolerable error

control risk

acceptable audit risk

business risk

inherent risk

materiality

Correct Answer:

Premises: