Audit planning in difficult times

In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please re-read the article before attempting the questions again.

  1. Which of the following best explains the relationship between business risk and the risk of material misstatement?

  2. Which of the following could lead to going concern problems? (i) Difficulties in complying with the terms of loan agreements; (ii) Property, which the company does not intend to sell, has decreased in value; (iii) Customers taking longer to pay; (iv) Lower availability of trade credit

  3. Which is the correct order for these steps in the audit? (i) Identify the business risks facing the client; (ii) Gain an understanding of the company`s business and the environment in which it operates; (iii) Design suitable responses to the risks of material misstatement; (iv) Assess the risks of material misstatement

  4. Which of the following is not a business risk?

  5. Which of the following is the best definition of business risk?