What Is Audit Risk

question 66

Multiple Choice

What is audit risk?

• A)the risk that an auditor expresses an inappropriate audit opinion when the financial statements are materially misstated
• B)the risk that an auditor expresses an objectionable audit opinion when the financial statements are materially misstated
• C)the risk that an auditor expresses an adverse opinion when the financial statements are materially misstated
• D)the risk that an auditor expresses an incompatible audit opinion when the financial statements are materially misstated

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Definitions:

Petty Cash Fund

A small amount of cash kept on hand within a business for minor and immediate expenses.

Internal Control

Initiatives and standards implemented by a firm to assure the correctness of financial and accountancy details, encourage integrity, and obstruct fraudulent activities.

Journal Entries

The method by which all business transactions are initially recorded, using a system of debits and credits, to maintain the financial records of an entity.

Segregation Of Duties

A key internal control that prevents fraud and errors by ensuring that no single individual has control over all aspects of a financial transaction.