The Assessment of Inherent Risk Requires Consideration of Matters That

question 22

Multiple Choice

The assessment of inherent risk requires consideration of matters that have a pervasive effect on the entity as a whole and matters that may affect only specific accounts. Which of the following is an example of a "pervasive effects" matter?

• A) industry of operation.
• B) susceptibility to misappropriation.
• C) sensitivity of valuations to economic factors.
• D) all of the above.

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Definitions:

Locus of Control

Locus of control is a psychological concept that refers to individuals' belief about the extent to which the outcomes of their actions are under their own control (internal locus) or influenced by external factors (external locus).

Reinforcement Contingency

Reinforcement contingency is a term in behavioral psychology that refers to the relationship between a behavior and its consequence, emphasizing that a behavior must be followed by a reinforcement for the behavior to be increased.

Internal

Pertaining to or situated within something; often refers to phenomena or processes occurring within an organism or object.

External

Originating from outside, not confined within an entity or individual.