What Is a Potential Risk of Under-Auditing

question 65

Multiple Choice

What is a potential risk of under-auditing?

• A) It exposes the audit firm to loss of professional reputation.
• B) An audit may be assessed incorrectly.
• C) Control risk may be assessed inappropriately.
• D) Insufficient evidence may have been allocated to the audit.

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Definitions:

Liabilities

Financial obligations or debts owed by a company to creditors, typically categorized as current (due within one year) or long-term.

Stockholders' Equity

The ownership interest of shareholders in a corporation, represented by their shares of the company.

Increase Assets

The act of growing the resources owned by an entity that have future economic value and can be measured and expressed in monetary units.

Business Entity Assumption

A principle in accounting that treats a business as separate from its owners or other businesses, allowing for independent financial accounting and reporting.