When Dealing with Audit Risk

question 55

Multiple Choice

When dealing with audit risk,

• A) audit risk should not be a factor when determining if a new client should be accepted.
• B) audits with a low acceptable audit risk generally result in lower audit fees.
• C) if management of a company has a reputation of integrity, but is also known to take aggressive financial risks, the auditor should not accept the company as a new client.
• D) if the auditor concludes that acceptable audit risk is low, but the client is still acceptable, the auditor may still accept the engagement but increase the fee proposed to the client.

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Definitions:

Executive Summary

A concise, comprehensive overview of a document or report, highlighting its most important points.

Proposal

A formal plan or suggestion put forward for consideration or discussion by others.

Qualification of Personnel

The skills, education, and experience that make an individual capable and suitable for a specific job or task.

Page Design

The layout and styling of content on a page, whether in print or digital form, to enhance readability and aesthetic appeal.