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Match the Terms Below (A-H) with the Definitions Provided Below

Question 110

Matching

Match the terms below (a-h) with the definitions provided below (1-8).

Premises:

Responses:

a measure of the auditor's assessment of the likelihood that there are material misstatements before considering the effectiveness of internal control

acceptable audit risk

a measure of the risk that audit evidence for a segment will fail to detect misstatements exceeding the performance materiality amount should such misstatements exist

materiality

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

control risk

the magnitude of an omission or misstatement of accounting information that makes it probable that the judgment of a reasonable person would have been changed

planned detection risk

This term is synonymous with acceptable audit risk.

audit assurance

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

performance materiality level

the materiality allocated to any given account balance

inherent risk

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

preliminary judgment about materiality

Premises:

a measure of the auditor's assessment of the likelihood that there are material misstatements before considering the effectiveness of internal control

a measure of the risk that audit evidence for a segment will fail to detect misstatements exceeding the performance materiality amount should such misstatements exist

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

the magnitude of an omission or misstatement of accounting information that makes it probable that the judgment of a reasonable person would have been changed

This term is synonymous with acceptable audit 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

the materiality allocated to any given account balance

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

Responses:

acceptable audit risk

materiality

control risk

planned detection risk

audit assurance

performance materiality level

inherent risk

preliminary judgment about materiality

Correct Answer:

Premises:

Responses:

a measure of the auditor's assessment of the likelihood that there are material misstatements before considering the effectiveness of internal control

a measure of the risk that audit evidence for a segment will fail to detect misstatements exceeding the performance materiality amount should such misstatements exist

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

the magnitude of an omission or misstatement of accounting information that makes it probable that the judgment of a reasonable person would have been changed

This term is synonymous with acceptable audit 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

the materiality allocated to any given account balance

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