ICAEW ARF · Chapter 3 · Question 11 of 13
Which of the following is NOT a risk assessment procedure used to obtain an understanding of the entity and its environment?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Sending confirmation requests to the client's major customers
Explanation
Risk assessment procedures comprise inquiries, analytical procedures, and observation and inspection. External confirmations of customer balances are further audit procedures performed in response to assessed risks, to provide evidence about receivables. They are not used to gain an understanding of the entity.
More Planning, materiality and risk assessment MCQs
- Q13Which of the following would be included in the detailed audit plan rather than the overall audit strategy?
- Q1Which of the following is NOT an objective of planning an audit?
- Q2Audit risk is a function of inherent risk, control risk and detection risk. Which of these can the auditor directly influence?
- Q3An auditor has assessed both inherent risk and control risk for trade receivables as high. What is the appropriate response?
- Q4An audit firm sets overall materiality at 5% of profit before tax. A client's draft profit before tax is £840,000. What is overall…