Auditors Want a Low Audit Risk of 5% and a Low

question 18

Multiple Choice

Auditors want a low audit risk of 5% and a low detection risk of 5%.In order to achieve this, what will inherent risk and control risk have to be?

• A)100% for both
• B)1% for inherent risk and 100% for control risk
• C)1% for both
• D)The risks cannot be determined because there is not enough information.

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Definitions:

Ownership Stake

The percentage of a company's shares owned by an individual or entity, representing a portion of the company's equity.

Align

To adjust or arrange something in a straight line or in correct relative positions.

Shareholders

Individuals or entities that own shares in a corporation, giving them ownership interests and usually voting rights in the company.

Stock Options

are financial derivatives that give the holder the right, but not the obligation, to buy or sell stocks at a predetermined price within a specific period.