If Tests of Controls Induce the Audit Team to Change

question 106

Multiple Choice

If tests of controls induce the audit team to change the assessed level of control risk for fixed assets from 0.4 to 1.0 and audit risk (0.05) and inherent risk remain constant,the acceptable level of detection risk is most likely to

• A) Change from 0.1 to 0.04.
• B) Change from 0.2 to 0.3.
• C) Change from 0.25 to 0.1.
• D) Be unchanged.

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Definitions:

Brightly Lit

An environment or area that is well illuminated with light, often used to describe spaces designed to enhance visibility.

Colors

Visual properties perceived by the eye and brain due to the way an object reflects or emits light, often evoking psychological and emotional responses.

Signal Detection Theory

A theoretical framework used to understand how decision makers differentiate between important stimuli in the presence of noise, focusing on the ability to correctly identify signals.

Absolute Threshold

The absolute threshold is the minimum intensity of stimulus that an individual can detect at least 50% of the time.