Question

1. One potential judgment bias involves people tending to seek out and place greater emphasis on information supporting their initial beliefs. Which of the following biases is this an example of?

Select one:

a. Availability Tendency

b. Rush to Solve

c. Confirmation Tendency

d. Anchoring Tendency

Which type of audit opinion would be appropriate for the following:

2. There is a departure from GAAS that is material, but not pervasive.

Select one:

a. Unmodified

b. Qualified

c. Adverse

d. Disclaimer

3.

Excess inventory belonging to your client is stored at an off-site warehouse. As part of your audit testing of that warehouse you do a walkthrough looking for obsolete inventory items. This procedure tests which of the following assertions?

Select one:

a. existence

b. valuation

c. occurrence

d. accuracy

e. rights and obligations

4.

Event: Your audit partner takes on a new high-risk audit client and wants you to perform an extra thorough audit during your first year with the new client. How does this impact Audit Risk in the Audit Risk Model?

Select one:

a. It increases.

b. It decreases.

c. No effect.

d. Not applicable.

Answer 1

1
Ans - Confirmation Tendency
(In confirmation tendency people already have some beliefs and they look for evidence which focuses or supports their initial beliefs)

2
Ans - Qualified Opinion
(In case an auditor discovers matter in his audit that are material but not pervasive then he is required to give a Qualified opinion)

3
Ans - Valuation
(Valuation assertion is checking that all assets and liabilities have been properly recorded as per their value and checking Obsolete inventory items is a part of that assertion)

4
Ans - It decreases
(Audit risk is the risk of expressing inappropriate opinion on financial statements that have material misstatements. If there is extra thorough audit by partner, then chances of overlooking and giving inappropriate opinion decreases as so does the Audit risk)

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