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
Definitions:
Sell An Asset
The act of disposing of a property or other investment in exchange for money or other assets.
Owner's Right
The legal entitlements and privileges that come with owning an asset or property, including the right to use, rent, or sell it.
Financial Risk
The possibility of losing money on investments or business operations due to market fluctuations, interest rates, or credit issues.
Futures Contracts
Contracts that legally bind parties to purchase or sell a specific commodity or financial instrument for a set price on a future date.
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