An Auditor Has Computed the Revised Level of Detection Risk

question 81

Multiple Choice

An auditor has computed the revised level of detection risk by direct use of the audit risk model. This means that the auditor must have:

• A) assessed control risk at the maximum.
• B) used a flowchart to document the understanding of the complete internal control structure.
• C) used the primarily substantive approach in planning the audit.
• D) quantified all the relevant risk assessments.
• E) assessed detection risk at the minimum.

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Definitions:

CCA Tax Shield

A tax deduction that allows businesses to depreciate the cost of tangible property or assets over time, reducing taxable income.

Discount Rate

In DCF analysis, this is the rate used to ascertain the present value of forthcoming cash flows.

Gear Ratio

The ratio between the rates at which the last and first gears in a series turn, affecting the vehicle's performance and fuel efficiency.