When Inherent Risk Is Assessed as Higher (I

question 44

Multiple Choice

When inherent risk is assessed as higher (i.e.more material errors are likely to exist) and control risk is assessed the same from one year to the next,what is the likely effect on detection risk?

• A)Detection risk will increase.
• B)Detection risk will decrease.
• C)Detection risk will stay the same.
• D)Detection risk will need less documentation.

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Definitions:

Fair Debt Collection Practices Act

A U.S. federal law designed to eliminate abusive, deceptive, and unfair debt collection practices by debt collectors.

Standard Credit Company

A hypothetical or generic name for a company that provides credit services, evaluating creditworthiness and offering loans or credit to individuals and businesses.

Equal Credit Opportunity Act

A U.S. law aimed at granting all individuals a fair opportunity to obtain credit, prohibiting discrimination based on race, color, religion, national origin, sex, marital status, age, or because someone receives public assistance.

Consumer Finance Corporation

A financial institution that provides loans to consumers for purchasing consumer goods and services.