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.

---

Definitions:

Analysis of Variance

A collection of statistical models and their associated procedures used to analyze the differences among group means.

Production Processes

The methods and sequences of activities involved in the manufacture of a product or delivery of a service.

Mean Hourly Units

The average quantity of units produced or operated in an hour.