Which of the Following Risks Exposes the Auditor to Effectiveness

question 30

Multiple Choice

Which of the following risks exposes the auditor to effectiveness losses?

• A) Risk of assessing control risk too high, risk of incorrect acceptance.
• B) Risk of assessing control risk too low, risk of incorrect rejection.
• C) Risk of assessing control risk too high, risk of incorrect rejection.
• D) Risk of assessing control risk too low, risk of incorrect acceptance.

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Definitions:

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that guide the financial reporting process.

Double-Entry Accounting

An accounting method that involves making two entries for every transaction, to maintain the balance of the accounting equation.

Debits and Credits

Fundamental elements of double-entry bookkeeping, where debits represent increases in assets or expenses and credits signify increases in liabilities, equity, or income.

Transaction

An agreement or exchange between two or more parties that is recorded and has a financial impact on the business.