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:

Appliance Producers

companies engaged in the manufacture of electrical or mechanical devices designed for household use.

Crony Capitalism

A type of economic system where business success is heavily influenced by close relationships between business owners and government officials.

Government Regulation

Government regulation encompasses the laws and rules set forth by the government intended to control or manage certain practices, activities, or behaviors within an economy or society.

Entry Barriers

These are obstacles that prevent or hinder new competitors from easily entering an industry or area of business.