Which of the Following Is an Accurate Statement Regarding Audit

question 27

Multiple Choice

Which of the following is an accurate statement regarding audit risk, audit failure, and business failure?

• A) Audit risk is always avoidable if the audit is conducted in accordance with generally accepted auditing standards.
• B) Because auditors gather evidence on a test basis, and because well-concealed frauds are difficult to detect, audit risk is unavoidable.
• C) Legal precedent makes it easy to determine who has the right to recover losses in the event of an audit failure.
• D) A business failure will always result in an audit failure.

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Definitions:

Agreement

A mutual understanding or arrangement between two or more parties, often formalized in a contract, outlining terms and conditions.

Tort

A wrongful act or an infringement of a right leading to civil legal liability.

Contract

An agreement between two or more parties that is binding by law and comes with mutual responsibilities.

Courts

are judicial institutions with the authority to adjudicate legal disputes between parties and carry out the administration of justice in civil, criminal, and administrative matters.