Step 2 of the Planning Process Is the Risk Assessment

question 27

Multiple Choice

Step 2 of the planning process is the risk assessment phase.At this stage of the planning process the objective of the auditor is to identify and assess the risk of material misstatement.The auditor does this by

• A)gaining an understanding of the company and its environment,including the company's internal controls
• B)gaining an understanding of the company's industry,including the company's competition
• C)developing an audit strategy to respond to the risk of material misstatement
• D)determining risk assessment procedures to assess the risk of material misstatement at the financial statement and assertion level

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Definitions:

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A feature in Microsoft Outlook that allows users to save and manage contact information such as email addresses, phone numbers, and mailing addresses.

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A bequest of a specific amount of money or a specific asset to a particular beneficiary, as stipulated in a will.

Specific Legacy

A bequest in a will that leaves a particular piece of property or a specified asset to a designated beneficiary.

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The remainder of an estate that is left after all specific bequests have been fulfilled and debts have been paid.