Which of the Following Would Be an Example of an Action

question 45

Multiple Choice

Which of the following would be an example of an action that exposes an auditor to nonsampling risk?

• A)The audit team draws a sample of transactions from throughout the entire period under audit.
• B)The audit team uses an inappropriate type of audit procedure to evaluate sample evidence.
• C)The audit team uses professional judgment in evaluating sample results.
• D)The audit team limits the selection of sample items to larger dollar balances in an account.

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Definitions:

Short-Run Exposure

Financial risk associated with fluctuating exchange rates that affects a company's transactions or valuation in the near term.

Exchange Rate Risk

The potential for losses resulting from fluctuations in the exchange rate between two currencies in international transactions.

Foreign Exchange Market

A global marketplace for trading currencies, determining the foreign exchange rates for every currency.

Currency

A system of money in general use in a particular country or economic context, facilitating the transfer of goods and services.