Suppose Auditors Assess Inherent Risk and Control Risk as Low

question 38

Multiple Choice

Suppose auditors assess inherent risk and control risk as low, 25% and 8% respectively.If auditors want to keep audit risk relatively low at 5%, then what is detection risk?

• A)2.50 or 250%
• B).02 or 2%
• C).05 or 5%
• D)2.00 or 200%

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Definitions:

Comparative Purposes

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A method used in accounting to determine whether all revenues and costs or only the net difference is recorded.

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The U.S. Securities and Exchange Commission, which is responsible for enforcing federal securities laws and regulating the securities industry, stock and options exchanges.