In Practice, Auditors Rarely Assign Numerical Probabilities to Inherent Risk

question 10

Short Answer

In practice, auditors rarely assign numerical probabilities to inherent risk, control risk, or acceptable audit risk. It is more common to assess these risks as high, medium, or low. For each of the four situations below, fill in the blanks for planned detection risk and the amount of evidence you would plan to gather ("planned evidence") using the terms high, medium, or low.

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Definitions:

Personal Desires

Refers to individual wants or cravings that motivate behavior towards a goal or satisfaction.

Individualism

A principle valuing the independence and self-reliance of an individual, often emphasizing personal freedom and autonomy over collective or communal goals.

Light Therapy

A treatment for seasonal affective disorder (SAD) and certain other conditions by exposure to artificial light.

Depression

A mood disorder characterized by persistent feelings of sadness, loss of interest, and a lack of energy or motivation.