The Auditor Should Assess the Risk That Errors and Fraud

question 29

Multiple Choice

The auditor should assess the risk that errors and fraud may cause the financial report to be materially misstated and, based on that assessment:

• A)design the audit to provide reasonable assurance of detecting errors and fraud that are material to the financial report.
• B)plan the audit to search for errors or fraud that could be material to the financial report.
• C)perform the audit on the basis that errors or fraud are likely to cause a material misstatement of the financial report.
• D)apply substantive tests to detect material misstatements except those perpetrated by means of forgery or collusion.

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Definitions:

Aponeurosis

A flat, broad tendon-like structure that connects muscles to the parts they move or to other muscles.

Posterior Cruciate Ligament

A ligament in the knee connecting the femur (thighbone) to the tibia (shinbone), crucial for stabilizing the knee and preventing it from moving backward.

Anterior Cruciate Ligament

A key ligament within the knee joint that connects the femur (thighbone) to the tibia (shinbone), critical for stabilizing the knee.

Medial Collateral Ligament

A major ligament located on the inner side of the knee, providing stability to the joint by preventing it from overextending inward.