Control Risk Is

question 108

Multiple Choice

Control risk is

• A) the probability that the auditor will render an unqualified opinion on financial statements that are materially misstated
• B) associated with the unique characteristics of the business or industry of the client
• C) the likelihood that the control structure is flawed because controls are either absent or inadequate to prevent or detect errors in the accounts
• D) the risk that auditors are willing to take that errors not detected or prevented by the control structure will also not be detected by the auditor

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Definitions:

Profit

The financial gain achieved when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Collusion

An agreement among firms, usually in secret, to fix prices or to divide markets among themselves, which restricts competition.

Fix Prices

Fix prices involves setting product or service prices at a certain level, often agreed upon among competitors to avoid undercutting each other, which is illegal in many jurisdictions.

Market Share

The share of a market dominated by a specific company or product, commonly represented as a proportion of the overall sales in that market.