The Most Important Reason to Use Risk Assessment in Audit

question 99

Multiple Choice

The most important reason to use risk assessment in audit planning is to:

• A) Identify redundant controls.
• B) Improve budgeting accuracy.
• C) Enhance assurance provided to management.
• D) Assist in developing audit programs.

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Definitions:

Real Option

The value of additional decision-making opportunities available to an investor or company once an initial investment has been made.

Financial Results

The summary of a company's financial performance and position, typically reported on a quarterly and annual basis.

Risk-Adjusted Rates

In capital budgeting, a rate used in place of the cost of capital to reflect especially risky projects.

Interest Rate

The amount charged, expressed as a percentage of the principal, by a lender to a borrower for the use of assets.