In a Financial Statement Audit,inherent Risk Is Evaluated to Help

question 69

Multiple Choice

In a financial statement audit,inherent risk is evaluated to help an auditor asses which of the following?

• A)the internal audit department's objectivity in reporting a material misstatement of a financial statement assertion it detects to the audit committee
• B)the risk the internal control system will not detect a material misstatement of a financial statement assertion
• C)the risk that the audit procedures implemented will not detect a material misstatement of a financial statement assertion
• D)the susceptibility of a financial statement assertion to a material misstatement assuming there are no related controls

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Definitions:

Critical Value

A threshold value in hypothesis testing, beyond which we reject the null hypothesis in favor of the alternative hypothesis.

P-Value

A measure in statistical hypothesis testing that helps in determining the significance of the results.

Null Hypothesis

The hypothesis that there is no effect or no difference, serving as the default assumption in hypothesis testing.

Marginal Propensity

The fraction or portion of an additional amount of income that is spent on consumption, saving, or other economic activities.