An Inaccurate Version of the Audit Risk Model Would Imply

question 16

Multiple Choice

An inaccurate version of the audit risk model would imply that:

• A) detection risk is inversely related to inherent risk.
• B) detection risk can be determined from audit risk, inherent risk and control risk.
• C) detection risk is inversely related to audit risk.
• D) audit risk is related to all other risks in the model.
• E) increases in the acceptable level of control risk will cause decreases in detection risk.

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Definitions:

Check Register

A check register, also known as a cash disbursements journal, is used to keep track of financial transactions, specifically outflows, associated with a bank account.

Cash Balance

The amount of cash a company or individual has available after all transactions have been accounted for.

Checks

Written, dated, and signed instruments that direct a bank to pay a specific sum of money to the bearer.

First National Bank

A commonly used name for banks in various countries, typically indicating it was the first bank chartered under national laws.