Which One of the Following Statements Regarding Inherent Risk Is

question 79

Multiple Choice

Which one of the following statements regarding inherent risk is correct?

• A) The inherent risk assigned in the audit risk model is dependent upon the strengths in client's internal control system.
• B) The inherent risk assigned in the audit risk model is unaffected by the auditor's experience with client's organisation.
• C) Most auditors set a high inherent risk in the first year of an audit and reduce it in subsequent years as they gain experience, even when there is inherent risk.
• D) Most auditors set a low inherent risk in the first year of an audit and increase it if experience shows that it was incorrect.

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Definitions:

Ongoing Process

A continuous operation or series of actions that evolve over time, indicating that it is not stationary but constantly moving or developing.

Deciding

The cognitive process of choosing between different options or actions.

Tasks

Refers to specific duties or work to be completed by a person or group.

Individual

A single human being as distinct from a group, class, or family.