Risk in Auditing Means That the Auditor Accepts Some Level

question 24

Multiple Choice

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

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

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Definitions:

Diffusion

The process by which molecules spread from areas of high concentration to areas of low concentration.

Cross-sectional Area

The area of a particular section of an object or substance, usually measured perpendicular to a specific axis.

Capillaries

The smallest blood vessels in the body which facilitate the exchange of water, oxygen, carbon dioxide, and many other nutrient and waste chemical substances between blood and the tissues.

Velocity

A physical vector quantity that denotes the rate of change of position of an object with respect to time, including both speed and direction.