The Auditor Set Audit Risk at 5%, Inherent Risk at 100

question 40

Multiple Choice

The auditor set audit risk at 5%, inherent risk at 100%, and control risk at 50%, and determined a detection risk of 10%. If control risk had been 80%, detection risk would be about

• A) 16%.
• B) 10%.
• C) 6%.
• D) 5%.

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Definitions:

Span Of Control

The number of subordinates that a manager or supervisor can effectively oversee, control, or manage directly.

Coordination

The organized arrangement of efforts and resources among different persons or groups to achieve a common goal.

Supervision

The process of overseeing and managing employees to ensure they are working effectively towards organizational goals.

Flatter Structures

Organizational structures characterized by fewer hierarchical levels, encouraging better communication and faster decision-making processes.