If an Auditor Believes the Chance of Financial Failure Is

question 39

Multiple Choice

If an auditor believes the chance of financial failure is high and there is a corresponding increase in business risk for the auditor, acceptable audit risk would likely

• A) be reduced.
• B) be increased.
• C) remain the same.
• D) be calculated using a computerized statistical package.

---

Definitions:

Seasonal Variation

Periodic fluctuations in data or statistics that recur in a consistent pattern each year within the same period.

Regression Technique

A set of statistical processes for estimating the relationships among variables, often to predict the value of a dependent variable from one or more independent variables.

Linear Trend Line

A linear trend line represents a straight line that best fits the data points in a linear regression analysis, showing the relationship and trend of the data over time.

Seasonal Indexes

Factors used to adjust data for seasonal variations, allowing for more accurate analysis of trends over time.