In Practice, Auditors Rarely Assign Numerical Probabilities to Inherent Risk

question 44

Essay

In practice, auditors rarely assign numerical probabilities to inherent risk, control risk, or audit risk. It is more common to assess these risks as high, medium, or low. For each of the four situations below, fill in the blanks for detection risk and the amount of evidence you would plan to gather ("planned evidence") using the terms high, medium, or low.
SITUATION
$$\begin{array} { | l | l | l | l | l | } \hline & 1 & 2 & 3 & 4 \\\hline \text { Audit risk } & \text { Low } & \text { Low } & \text { High } & \text { High } \\\hline \text { Inherent risk } & \text { High } & \text { Low } & \text { Low } & \text { Low } \\\hline \text { Control risk } & \text { High } & \text { Low } & \text { Medium } & \text { Low } \\\hline \text { Detection risk } & & & & \\\hline \begin{array} { l } \text { Planned } \\\text { evidence }\end{array} & & & & \\\hline\end{array}$$

Recognize significant assessment findings in patients with COPD that require immediate follow-up.

Educate patients with COPD on the pathophysiology behind symptoms and complications, including finger clubbing.

Recognize the interactions between medications and herbal supplements, particularly in managing chronic conditions.

Identify the signs and symptoms of acid-base imbalances and their management.

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Definitions:

Price-Setting Process

The procedure companies use to determine the price at which they will sell their products and services, taking into account costs, demand, competition, and profit objectives.

Pricing Objectives

Goals that a company wants to achieve through its pricing strategies, including maximizing profit, increasing market share, or positioning the product.

Strategic Decisions

High-level choices made by senior management that set the long-term direction and objectives of an organization.

Pricing

The process of determining the monetary value at which a good or service will be sold in the market.