IT Audit, Chapter 9: "Assessing the Risk of Material Misstatement" flash cards

Risk of Material Misstatement

(9.1) The risk that financial statements contain a material misstatement due to fraud or error prior to the audit.

Significant Risk

(9.4) An identified and assessed risk of material misstatement that, in the auditor’s professional judgment, requires special audit consideration.

Audit Risk Model

(9.5) A model that helps auditors decide how much and what types of evidence to accumulate for each relevant audit objective.

Inherent Risk

(9.5) An auditor’s assessment of the expectation of material misstatement before considering internal controls.

Control Risk

(9.5) An auditor’s assessment of effectiveness of internal controls to prevent, or detect and correct, material misstatements.

Acceptable Audit Risk

(9.5) An auditor’s willingness to permit material misstatements after completing the audit.

Planned Detection Risk

(9.5) The extent of evidence the auditor plans to accumulate.

Engagement Risk

(9.6) The risk that the auditor or audit firm will suffer harm after the audit is finished, even though the audit report was correct.

Nonroutine Transaction

(9.4) A transaction that is unusual, due to either size or nature, and that is infrequent in occurrence.