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

Question 113

Matching

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

Premises:

Responses:

This term is synonymous with acceptable audit risk.

Acceptable audit risk

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.

Preliminary judgment about materiality

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.

Planned detection risk

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

Materiality

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

Performance materiality level

The materiality allocated to any given account balance.

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.

Audit assurance

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.

Inherent risk

Premises:

This term is synonymous with acceptable audit risk.

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.

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

The materiality allocated to any given account balance.

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.

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.

Responses:

Acceptable audit risk

Preliminary judgment about materiality

Planned detection risk

Materiality

Performance materiality level

Control risk

Audit assurance

Inherent risk

Correct Answer:

Premises:

Responses:

This term is synonymous with acceptable audit risk.

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.

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

The materiality allocated to any given account balance.

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.

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.