AAA Planning, risk and evidence

ACCA · Strategic Professional · 7 questions

Name: ____________________   Date: ____________

1. Overall materiality is set at 1 percent of revenue of $50m. Performance materiality is set at 75 percent of that. Performance materiality is:

   • A $50,000
   • B $375,000
   • C $750,000
   • D $500,000

2. Audit risk is the risk that the auditor gives an inappropriate opinion. Which model is used for it?

   • A Inherent risk x control risk x detection risk
   • B Revenue x cost x profit
   • C Sample size x error
   • D Cost x benefit

3. If audit risk is to be 5 percent, inherent risk is assessed at 100 percent and control risk at 50 percent, the acceptable detection risk is:

   • A 50%
   • B 5%
   • C 10%
   • D 25%

4. A significant risk requires:

   • A No audit work
   • B Special audit consideration, including substantive procedures that respond specifically to it
   • C The same work as other risks
   • D A reduced sample

5. When using the work of an internal auditor, the external auditor should:

   • A Rely on it without review
   • B Pass responsibility to the internal auditor
   • C Evaluate their competence, objectivity and the quality of the work, and keep responsibility for the opinion
   • D Avoid it in all cases

6. In a group audit, component materiality is set:

   • A Equal to group materiality for every component
   • B Lower than group materiality, so that aggregation does not exceed what is acceptable
   • C Higher than group materiality
   • D At zero

7. Which of the following gives the most reliable audit evidence?

   • A A document created by the client
   • B An oral explanation by management
   • C A photocopy
   • D A document obtained directly from an independent third party