Control Risk Is

question 14

Multiple Choice

Control risk is

• A)the probability that a material misstatement could not be prevented or detected by the entity's internal control policies and procedures.
• B)the probability that a material misstatement could occur and not be detected by auditors' procedures.
• C)the risk that auditors will not be able to complete the audit on a timely basis.
• D)the risk that auditors will not properly control the staff on the audit engagement.

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Definitions:

Probability Distribution

A mathematical function that describes the likelihood of obtaining the possible values that a random variable can assume.

Nominal Rate of Interest

The stated interest rate on a loan or financial asset, without adjustment for inflation or other factors.

Real Rate of Interest

The inflation-adjusted interest rate, which shows the actual cost of borrowing and the genuine return for lenders or investors.

Inflation Rate

The rate at which prices for all goods and services climb, resulting in a decrease in the ability to purchase.