Which of the Following Statements Regarding Inherent Risk Is Correct

question 21

Multiple Choice

Which of the following statements regarding inherent risk is correct?

• A) Inherent risk is unaffected by the auditor's experience with client's organization.
• B) Most auditors set a low inherent risk in the first year of an audit and increase it if experience shows that it was incorrect.
• C) Most auditors set a high inherent risk in the first year of an audit and reduce it in subsequent years as they gain more knowledge about the company.
• D) Inherent risk is dependent upon the strengths in client's internal control system.

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Definitions:

SMTP

Simple Mail Transfer Protocol, a protocol for sending emails across the internet.

POP

Post Office Protocol, a standard protocol used to retrieve email from a mail server.

Email Service Provider

A company that offers email hosting services, allowing users to send and receive emails.

Outgoing Email Server

The server used for sending email from an email client; it routes outgoing emails to the recipient’s email server.