Most Auditors Assess Inherent Risk as High for Related Parties

question 43

Multiple Choice

Most auditors assess inherent risk as high for related parties and related- party transactions because:

• A) of the lack of independence between the parties.
• B) of the accounting disclosure requirement.
• C) both A and B
• D) it is required by generally accepted accounting principles.

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Definitions:

Avoid Favoritism

The practice of deliberately not giving preferential treatment to particular individuals or groups over others, ensuring fairness and equality.

Organizational Resources

Assets, including human, financial, physical, and informational, that an organization possesses and can utilize to execute its strategies and achieve its objectives.

Opportunity Power

The ability to influence people or situations through the creation or control of opportunities.

Politically Correct

Language or behavior that is designed to avoid offense or disadvantage to members of particular groups in society.