Which of the Following Is Most Likely to Be an Overall

question 4

Multiple Choice

Which of the following is most likely to be an overall response to fraud risks identified in an audit?

• A)Only use certified public accountants on the engagement.
• B)Place increased emphasis on the audit of objective transactions rather than subjective transactions.
• C)Supervise members of the audit team less closely and rely more upon judgment.
• D)Use less predictable audit procedures.

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Definitions:

Economic Inefficiency

A situation where resources are not allocated in the most effective way, resulting in waste or loss of potential benefit to society.

Externalities

Economic side effects or consequences that affect uninvolved third parties; can be either positive or negative.

Market Prices

The current price at which a good or service can be bought or sold in a market.

Efficient Level

The efficient level refers to a state of resource allocation where it is impossible to improve the situation of one party without worsening the situation of another, often associated with maximizing output without wasting resources.