Risk in Auditing Means That the Auditor Accepts Some Level

question 72

Multiple Choice

Risk in auditing means that the auditor accepts some level of uncertainty in performing the audit function. An effective auditor will:

• A) set the risk level between 5% and 10%.
• B) recognise that risks exist and deal with those risks in an appropriate manner.
• C) perform the audit procedures first and quantitatively set the risk level before forming an opinion and writing the report.
• D) take any means available to reduce the risk to the lowest possible level.

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Definitions:

TVC

Total Variable Cost, the total of all costs that vary with the level of output.

Total Revenue

The entire amount of income generated by the sale of goods or services related to a company's primary operations.

Variable Costs

Expenses that change in proportion to the activity of a business, such as costs for raw materials or labor.

Fixed Costs

Fixed Costs are business expenses that do not change with the level of goods or services produced by the company.