Most Auditors Assess Inherent Risk as High for Related Parties

question 50

Multiple Choice

Most auditors assess inherent risk as high for related parties and related-party transactions because:

• A)of the unique classification of related-party transactions required on the balance sheet.
• B)of the lack of independence between the parties.
• C)of the unique classification of related-party transactions required on the income statement.
• D)it is required by generally accepted accounting principles.

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Definitions:

Inoculation

A psychological technique aimed at protecting individuals from persuasion or influence by exposing them to a small dose of the argument against their beliefs.

Disappointment

The feeling of sadness or displeasure caused by the non-fulfillment of one's hopes or expectations.

Organizational Choice

The process by which individuals make decisions within organizational settings, often involving the selection of strategies or alternatives.

Entry Process

The procedure or set of steps one follows to begin participation in an organization, program, or system.