If the Client Has Set Unreasonable Objectives or If the Performance

question 50

Multiple Choice

If the client has set unreasonable objectives or if the performance measurement system encourages aggressive accounting,the auditor will

• A)increase inherent risk of financial statement misstatements.
• B)lower inherent risk of financial statement misstatements.
• C)increase control risk of financial statement misstatements.
• D)lower control risk of financial statement misstatements.

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Definitions:

Financial Statements

Documents presenting the financial activities and condition of a business, including statements like profit and loss accounts, and balance sheets.

General-Purpose

Designed or suitable for a range of uses or applications rather than a specific one.

External Users

Individuals or entities outside of a company who use its financial information, such as investors, creditors, or regulatory agencies.

Managerial Accounting Reports

Managerial accounting reports provide detailed financial and operational information to managers, aiding in decision-making processes.