Match Six of the Terms (A- I) with the Definitions

question 67

Short Answer

Match six of the terms (a- i) with the definitions provided below (1- 6):
a. business risk
b. preliminary judgement about materiality
c. inherent risk
d. planned detection risk
e. audit assurance
f. acceptable audit risk
g. tolerable error
h. control risk
i. materiality
1. A measure of the risk that the auditor will not detect a misstatement that exists in an assertion that could be material.
2. The risk that the auditor or audit firm will suffer harm because of a client relationship even though the audit report rendered for the client was correct.
3. A measure of the auditor's assessment of the likelihood that misstatements exceeding a tolerable amount in a segment will not be prevented or detected by the client's internal controls.
4. A measure of how much risk the auditor is willing to take that the financial statements may be materially misstated after the audit is completed and an unqualified audit opinion has been issued.
5. The materiality allocated to any given account balance.
6. The maximum amount by which the auditor believes that the statements could be misstated and still not affect the economic decisions of users.

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Definitions:

Supremacy Clause

A clause in the U.S. Constitution stating that federal law is the "supreme Law of the Land" and takes precedence over state laws.

Federalism

A system of government in which power is divided between a central authority and constituent political units, such as states in the U.S.

Unitary

Refers to a centralized governmental structure where local or provincial divisions have little independent power outside the central authority's directives.

Confederal

Relating to a confederation, which is an alliance between sovereign states, where the central authority has limited powers and the member states retain a high degree of autonomy.