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:

Survival

The act of continuing to live or exist, especially in spite of challenging conditions.

Validation Levels

The gradation or hierarchy of authentication processes to ascertain the correctness or accuracy of data or inputs.

Anxiety

A feeling of worry, nervousness, or unease about something with an uncertain outcome.

Accurate Reflection

The process in counseling or therapy where the therapist accurately interprets and mirrors back the client's thoughts or feelings, facilitating understanding and validation.