The Acceptable Risk of Assessing Control Risk Too Low (ARO)is

question 20

Multiple Choice

The acceptable risk of assessing control risk too low (ARO) is a measure of the level of risk that:

• A) is predicted by the statistical frequency table.
• B) the auditor is willing to take.
• C) is predicted by the random number table.
• D) is generated as a result of the auditor's knowledge of the true population deviation rate.

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Definitions:

Investment Income

Income received from investments, including dividends, interest, rental income, and capital gains.

General Fund

The primary operating fund of a governmental entity used to account for all financial resources except those required to be accounted for in another fund.

Restricted Contribution

Funds given to an entity with specific conditions or purposes attached, limiting their use.

Endowment Contributions

Financial gifts provided to an institution, typically with the stipulation that the principal remains intact while the investment income is used for organizational purposes.