Why Is the Auditor More Concerned with Controlling the Exposure

question 100

Multiple Choice

Why is the auditor more concerned with controlling the exposure to the risk of incorrect acceptance than with the risk of incorrect rejection?

• A)Only the risk of incorrect acceptance results in an incorrect decision by the auditor.
• B)The risk of incorrect rejection is not related to the auditor's substantive procedures.
• C)The risk of incorrect rejection can be controlled by performing substantive procedures during the interim period.
• D)The risk of incorrect acceptance may ultimately result in the auditor incorrectly issuing an unmodified opinion on the client's financial statements.

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Definitions:

Sampling

The process of selecting a subset of individuals or items from a larger population or collection to estimate characteristics of the whole group.

Commodity Products

Commodity products are basic goods that are interchangeable with other goods of the same type, typically standardized and traded on bulk in markets.

Buying Decisions

The process by which individuals or organizations select products or services to purchase, influenced by factors such as needs, desires, and external pressures.

Point-Of-Purchase Display

Marketing materials or advertising placed next to the merchandise it is promoting, typically found in the retail environment.