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Match the Terms Below (A-H)with the Definitions Provided Below (1-8)

Question 83

Matching

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

Premises:

Responses:

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

acceptable audit risk

This term is synonymous with acceptable audit risk.

planned detection risk

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

audit assurance

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

inherent 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

materiality

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

control risk

the materiality allocated to any given account balance

preliminary judgment about 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

performance materiality level

Premises:

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

This term is synonymous with acceptable audit risk.

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

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

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

the materiality allocated to any given account balance

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

Responses:

acceptable audit risk

planned detection risk

audit assurance

inherent risk

materiality

control risk

preliminary judgment about materiality

performance materiality level

Correct Answer:

Premises:

Responses:

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

This term is synonymous with acceptable audit risk.

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

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

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

the materiality allocated to any given account balance

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