AU-C 315, Understanding the Entity and Its Environment, and Assessing

question 102

Multiple Choice

AU-C 315, Understanding the Entity and Its Environment, and Assessing the Risks of Material Misstatement, defines risk assessment procedures as _______.

• A)audit procedures performed to obtain an understanding of the auditor and its environment, including the entity's internal control, to identify and assess the risk of material misstatement at the financial statement level and relevant assertion levels, whether due to error or fraud
• B)audit procedures performed to obtain an understanding of the entity and its environment, including the entity's internal control, to identify and assess the risk of material misstatement, at the financial statement level and relevant assertion levels - whether due to error or fraud
• C)any procedure that involves international currency transactions
• D)any procedure that was performed by the prior auditor, which is repeated by the current auditor

---

Definitions:

Voidable

Legally valid until annulled; a contract or agreement that can be legally declared invalid.

Liability

The state of being legally responsible for something, especially in terms of debts or legal obligations.

Commercial Lease Agreements

Legal contracts between a landlord and a business for the rental of property used for commercial activities.

Public Policy

Public policy encompasses the laws, regulations, actions, and decisions of government that reflect the attitudes and rules for the public.