When Discussing Acceptable Audit Risk (AAR)and the Audit Risk Model

question 99

Multiple Choice

When discussing acceptable audit risk (AAR) and the audit risk model, which one of the following statements is true?

• A) The terms audit assurance, overall assurance. and level of assurance are synonyms for AAR.
• B) When the auditor decides on a lower acceptable audit risk, it means the auditor wants to be certain that the financial statements are not materially misstated.
• C) AAR is the risk that the auditor is willing to take that the financial statements are fairly stated after the audit is completed and an unqualified opinion has been reached.
• D) AAR is objectively determined by the auditor.

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Definitions:

Behavioural Component

The observable actions or reactions of an individual, often in response to external stimuli or internal states, as part of a broader behavioural pattern.

James-Lange Theory

A hypothesis proposing that physiological arousal precedes the experience of emotion.

Conscious Experience

The awareness of internal and external events or stimuli, encompassing thoughts, feelings, and perceptions.

Autonomic Arousal

The activation or response of the autonomic nervous system, often in reaction to stress, resulting in physiological changes like increased heart rate or sweating.