Risk in Auditing Means That the Auditor Accepts Some Level

question 80

Multiple Choice

Risk in auditing means that the auditor accepts some level of uncertainty in performing the audit function.An effective auditor will:

• A) set the risk level between 5% and 10%.
• B) take any means available to reduce the risk to the lowest possible level.
• C) recognise that risks exist and deal with those risks in an appropriate manner.
• D) perform the audit procedures first and quantitatively set the risk level before forming an opinion and writing the report.

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Definitions:

Division of Labor

The allocation of different tasks to different people or groups in an effort to increase efficiency and productivity.

Productivity

A measure of the efficiency with which goods and services are produced, often quantified as output per unit of input.

Economic Profits

The surplus after a firm subtracts its total costs from its total revenue, considering both explicit and implicit costs.

Consumer Desire

The inclination or preference of consumers towards specific goods, services, or experiences, driven by individual needs and wants.