Why Does the Risk of Incorrect Rejection Result in an Efficiency

question 77

Multiple Choice

Why does the risk of incorrect rejection result in an efficiency loss to the auditor?

• A)Additional time is necessary to propose adjustments to the client's account balances.
• B)The auditor typically expands the sample to examine additional components or transactions of the account balance.
• C)More detailed audit procedures are performed on sample items already examined by the auditor.
• D)The auditor typically extends the study of internal control to attempt to obtain a reduction in the level of risk of material misstatement.

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Definitions:

Transfer

The movement of resources, products, or services from one part of an organization to another.

Manufacturing Firm

A business involved in the industrial production or manufacturing of goods, typically using machinery and labor.

Goods Completed

Finished products that have undergone the entire production process and are ready for sale.

Total Assets

Total assets represent the sum of all assets owned by a company, including current, fixed, tangible, and intangible assets, reflecting its total resources.