Detection Risk Is a Function of the Effectiveness of the Controls

question 34

True/False

Detection risk is a function of the effectiveness of the controls put into place and their application by client personnel.

---

Definitions:

Return on Equity (ROE)

A measure of financial performance calculated by dividing net income by shareholders' equity, reflecting the profitability relative to the equity.

Return on Assets (ROA)

A financial ratio indicating how profitable a company is relative to its total assets, calculated as net income divided by total assets.

Discounted Payback

The period of time it takes for the cash flows from an investment to equal the initial cost of the investment, accounting for the time value of money.

Rate of Return

The improvement or reduction in the value of an investment within a specified interval, articulated as a percentage of the investment’s first cost.