Step 2 of the Planning Process Is the Risk Assessment

question 96

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 management,including the company's financial controls
• B)gaining an understanding of the company's industry,including the company's competition
• C)determining materiality
• D)determining risk assessment procedures to assess the risk of material misstatement at the financial statement and assertion level

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Definitions:

Right Atrium

The right upper chamber of the heart that receives deoxygenated blood from the body and pumps it to the right ventricle.

Left Atrium

One of the four chambers of the heart, receiving oxygenated blood from the lungs and pumping it to the left ventricle.

Capillary Bed

A network of capillaries, small blood vessels, where exchange of oxygen, nutrients, and waste occurs between blood and tissues.

Diffusion

The movement of particles from an area of higher concentration to an area of lower concentration, driven by the kinetic energy of the particles, leading to an eventual equilibrium.