When the Auditor Is Considering the Risk of Material Misstatement

question 32

Multiple Choice

When the auditor is considering the risk of material misstatement, they will attempt to identify major risks, determine how these risks could relate to fraud or error, consider the importance of the risks, and ______.

• A)notify management of these risks
• B)attempt to immediately resolve any identified risks
• C)determine the probability that the identified risks might result in material misstatements
• D)determine who is responsible for each identified risk

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Definitions:

Ethical Intensity

Ethical Intensity refers to the perceived importance or significance of an ethical issue, determined by its potential outcomes and the degree of impact on stakeholders.

Ethics-Based Principles

Moral guidelines that govern the behavior and decision-making of individuals or organizations.

Determination of Rights

The process of legally establishing or affirming individuals' entitlements or privileges under the law.

Organization's Culture

The shared values, beliefs, and practices that shape the social and psychological environment of a business or entity.