CPAnet Forum: MCQs problem

Active Topics

Memberlist

Help

AUD STUDY GROUP
CPAnet Forum : AUD STUDY GROUP

Topic: MCQs problem (

Topic Closed)

Author

Message

<< Prev Topic | Next Topic >>

afroz
Contributor

Joined: 22 Sep 2011
Location: United States
Online Status: Offline
Posts: 76

Posted: 05 Aug 2012 at 18:44 \| IP Logged

An auditor may decide to increase the risk of incorrect rejection when

Answers

A: Increased reliability from the sample is desired.
B: Many differences (audit value minus recorded value) are expected.
C: Initial sample results do not support the planned level of control risk.
D: The cost and effort of selecting additional sample items is low.

Ans is D. Can anyone explain why the ans say selecting additional sample items is Low instead of High.
My explanation below-

Increasing the risk of incorrect rejection increases the likelihood of improperly concluding that a balance is materially misstated when it is not.Additional audit procedures, and consideration of other audit evidence will ordinarily lead the auditor to the correct conclusion, so if the cost and effort of selecting additional sample items is HIGH then the risk of incorrect rejection would be increases.

__________________
sharmin afroz

wool1
Newbie
Newbie

Joined: 26 May 2011
Online Status: Offline
Posts: 44

Posted: 07 Aug 2012 at 13:17 \| IP Logged

I think it's an error.

afroz
Contributor

Joined: 22 Sep 2011
Location: United States
Online Status: Offline
Posts: 76

Posted: 08 Aug 2012 at 20:23 \| IP Logged

thanks for the reply ...I also think that the questions has make some mistake.

__________________
sharmin afroz

fugui88
Newbie
Newbie

Joined: 22 Jun 2012
Location: United States
Online Status: Offline
Posts: 4

Posted: 11 Aug 2012 at 07:33 \| IP Logged

risk of incorrect rejection - is the risk that the sample supports the
conclusion that record in account balance is materially misstated in
fact it's not materially misstated. this risk low means the auditor
may fail to identify an existing problem. It relates to the efficiency
of the audit (Becker page A5-6)

I think Ans D makes sense, when increase risk of incorrect
rejection, means the auditor needs to do more audit work to get the
correct conclusion (not fail to identify an existing problem). If the
cost and effort of selecting additional sample items is low, the
auditor is willing to do so.

p.s. correct me if I am wrong.

afroz
Contributor

Joined: 22 Sep 2011
Location: United States
Online Status: Offline
Posts: 76

Posted: 16 Aug 2012 at 22:33 \| IP Logged

wow thanks thats make sense to me now...thanks

__________________
sharmin afroz

Sorry, you can NOT post a reply.
This topic is closed.

Printable version

You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot delete your posts in this forum
You cannot edit your posts in this forum
You cannot create polls in this forum
You cannot vote in polls in this forum