Why Is the Auditor More Concerned with the Risk of Overreliance

question 98

Multiple Choice

Why is the auditor more concerned with the risk of overreliance rather than the risk of underreliance?

• A) The risk of underreliance is not a type of sampling risk.
• B) The risk of overreliance exposes the auditor to an efficiency loss.
• C) The risk of overreliance may result in the auditor's failing to perform sufficient substantive procedures.
• D) The risk of overreliance cannot be controlled by the auditor during the sampling process.

Recognize the regional economic disparities and their historical causes and implications.

Understand the principles and methods of asset depreciation, including different methods of calculating depreciation.

Identify the costs that are included in the purchase of land, buildings, and equipment.

Differentiate between capital and revenue expenditures and their impact on financial statements.

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Definitions:

Illegitimate Children

Children born to parents not legally married to each other, affecting their legal rights and status in some jurisdictions.

Inherit

To receive assets or liabilities left by a deceased person through their will or by statutory rights.

Legal Proceeding

A formal process governed by law, including trials and hearings, in which legal judgments and decisions are made.

Legal Parents

Individuals who have legal authority and responsibility for a child, which can arise through biological relationship, adoption, or legal designation.