Which of the Following Statements Is Correct Regarding Risk Analysis

question 288

Multiple Choice

Which of the following statements is correct regarding risk analysis?

• A) The extent to which management judgments are required in an area could serve as a risk factor in assisting the auditor in making a comparative risk analysis.
• B) The highest risk assessment should always be assigned to the area with the largest potential loss.
• C) The highest risk assessment should always be assigned to the area with the highest probability of occurrence.
• D) Risk analysis must be reduced to quantitative terms in order to provide meaningful comparisons across an organization.

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Definitions:

Spearman's Models

Theories developed by Charles Spearman, including the concept of a general intelligence factor known as "g" that underlies specific cognitive abilities.

Intelligence

The ability to learn, understand, and make judgments or have opinions that are based on reason.

Performance Tests

Assessments designed to evaluate an individual's abilities or skills through hands-on activities and practical tasks rather than through written questions.

Intellectual Abilities

The capacity to think abstractly, reason, understand complex ideas, learn quickly and from experience, and solve problems.