You Generally Consider Your Audit Client's Management to Be Honest

question 38

Multiple Choice

You generally consider your audit client's management to be honest. However, they do have a bias towards wanting to understate their income to lower income taxes. How would this bias be implemented in the audit risk model?

• A) reduce audit risk and reduce inherent risk
• B) increase audit risk and reduce inherent risk
• C) reduce audit risk and increase inherent risk
• D) increase audit risk and increase inherent risk

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Definitions:

Peer Relationships

These are social connections between individuals of similar age, which play a crucial role in the social and emotional development of children and adolescents.

Ethology

The scientific study of animal behavior, often focusing on behaviors under natural conditions, and viewing behavior as an evolutionarily adaptive trait.

Evolutionary Basis

Refers to the root or origin of behaviors, traits, or structures as explained by the principles of evolution through natural selection.

Developmental Scientists

Researchers who study how and why humans grow and change throughout their lives, focusing on physical, cognitive, and social development.