Many Auditors Take an Approach to Assessing the Risk of Material

question 49

Essay

Many auditors take an approach to assessing the risk of material misstatement by beginning with an assessment of business risks.
a.Define business risks.
b.Why have auditors found it effective to take the approach of assessing business risks?
c.Identify a business risk and explain how it might affect the auditor's audit procedures.

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Definitions:

Maintain Shape

The ability of an object or material to preserve its configuration or form under stress or after manipulation.

Cones

Photoreceptor cells in the retina of the eye that are responsible for color vision and function best in relatively bright light.

Color Blind

A condition where an individual has difficulty distinguishing between certain colors, often genetic in nature.

Optic Chiasms

A cross-shaped connection of the two optic nerves in the brain where visual signals are partially crossed to the opposite side of the brain.