When the Financial Statements Are Materially Misstated for a Particular

question 10

Multiple Choice

When the financial statements are materially misstated for a particular client, which of the following will constitute an audit risk?

• A)An auditor expressing an incorrect audit opinion
• B)The discontinuance of an internal process from a previous year
• C)Creditors and investors expressing a favorable opinion
• D)Some stakeholders not relying on the auditing firm

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Definitions:

Market Economies

Economic systems where supply and demand from consumers drive the production, allocation, and distribution of resources.

Privatisation

The selling of state‐owned enterprises into private ownership.

State-Owned Enterprises

Organizations that are owned and operated by the government and play a role in the delivery of public services or the production of goods.

Private Ownership

Ownership of assets by individuals or corporations rather than by the state or public entities.