The Assessment of Inherent Risk Requires Consideration of Matters That

question 38

Multiple Choice

The assessment of inherent risk requires consideration of matters that have a pervasive effect on assertions for all or many accounts and matters that may pertain only to assertions for specific accounts. Which of the following is an example of a "pervasive effects" matter?

• A) complexity of calculations.
• B) management turnover, reputation, and accounting skills.
• C) susceptibility to misappropriation.
• D) sensitivity of operating results to economic factors.
• E) difficult-to-audit accounts or transactions.

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Definitions:

Coverdell Education

A savings account designed to help families pay for education expenses, including k-12 and college costs, with tax-free earnings.

Qualified Education Expenses

are costs related to education, like tuition and fees, required for enrollment or attendance at an eligible educational institution.

Tax-Free

Tax-free refers to certain financial products or transactions that are not subject to tax by the government, such as certain municipal bonds or qualified withdrawals from a Roth IRA.

Single Life Annuity

An insurance product that provides a retiree with regular payments for the rest of their life, with no survivor benefits after their death.