Risks Associated with Specific Industries May Affect the Auditor's Assessment

question 20

Multiple Choice

Risks associated with specific industries may affect the auditor's assessment of client business risk and acceptable audit risk,and even influence client acceptance decisions.Which of the following businesses would be the most risky for the auditor to accept as a new client?

• A)a small manufacturer of metal and plastic parts that has steady profits and has been in business for 15 years
• B)a client who is developing a computer game that is expected to be ready in three years and has no other products
• C)a retail company in the clothing industry that has mid-range pricing and appeals to a large population sector
• D)a firm consisting of a partnership of ten lawyers that operates out of three different cities in one province

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Definitions:

Cooperation

The process of groups or individuals working together towards a common goal, often resulting in mutual benefit and shared success.

Self-objectification

The tendency to perceive oneself primarily as an object to be looked at and evaluated based on physical appearance.

Stereotype Threat

The fear or anxiety of confirming negative stereotypes about one’s group, which can impair performance.

Ingroup Bias

The tendency to favor members of one's own group over those in other groups, often leading to preferential treatment and prejudice.