Evidence Is Important to the Audit Because the Only Way

question 53

Multiple Choice

Evidence is important to the audit because the only way the auditor can obtain reasonable assurance that the financial statements are prepared in accordance with the applicable financial reporting framework is

• A)when the auditor has sufficient appropriate evidence to reduce the risk of material misstatement to an acceptably low level
• B)when the auditor has sufficient appropriate evidence to provide reasonable assurance that the financial statements are fairly presented
• C)when the auditor has sufficient appropriate evidence to reduce audit risk to an acceptably low level
• D)when the auditor has sufficient appropriate evidence to reduce detection risk to an acceptably low level

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Definitions:

Overjustification Effect

The tendency for salient rewards or threats to lead people to attribute the reason, or justification, for engaging in an activity to an external factor, which thereby undermines their intrinsic motivation for and enjoyment of the activity.

Intrinsic Enjoyment

The pleasure and satisfaction derived from engaging in an activity for its own sake, without any external rewards or pressures.

Extrinsic Reward

A reward that comes from an external source rather than from the intrinsic pleasure of the activity itself.

Overjustification Effect

A psychological effect whereby externally provided rewards can reduce a person's intrinsic motivation to perform a task, because the person comes to attribute their actions to the external rewards rather than their own interest in the task.