The Audit Risk Model Is a Theoretical Model Designed to Guide

question 4

Multiple Choice

The audit risk model is a theoretical model designed to guide the decision process of the auditor.The model could be used as an equation to calculate detection risk,but it is probably more useful to think of the model as expressing relationships among the risks included in the model.Some of these relationships include

• A)A lower risk of material misstatement will result in a higher detection risk.A higher detection risk means that the auditor will gather less substantive evidence.
• B)Substantive testing is usually done because the risk of material misstatement will usually be zero.Detection risk determines how much substantive testing will be done.
• C)A lower detection risk means less substantive testing is done.
• D)In the model,audit risk is a varying number.It is the level of audit risk that should remain at the end of the audit.

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Definitions:

Elemental Iodine

A nonmetallic element in the halogen group, appearing as a dark gray/purple solid at room temperature and used in medicine and nutrition.

Goiter

An abnormal enlargement of the thyroid gland, often resulting in a visible swelling in the neck, which can be caused by iodine deficiency.

Kwashiorkor

A form of malnutrition caused by inadequate protein intake, characterized by edema, stunted growth, and other health issues.

Overnourished

A condition in which an individual has consumed nutrients, especially calories, in excess of dietary requirements, leading to overweight and obesity.