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:

Outsourcing

The practice of hiring third-party vendors to perform tasks, handle operations, or provide services that are either difficult to manage or outside the core competencies of the hiring company.

IT Gap

The discrepancy between an organization's current information technology capabilities and the technology needed to achieve its goals or meet demand.

Integrate IT Systems

The process of linking together different computing systems and software applications physically or functionally to operate as a coordinated whole.

Shippers and Service Providers

Businesses involved in the transportation of goods (shippers) and those offering logistical services (service providers).