The Risk Based Approach to Auditing Is Dependent Upon the Auditor's

question 68

Multiple Choice

The risk based approach to auditing is dependent upon the auditor's ability to understand the business sufficient to identify and adjust to the residual risk left in account balances.What is the effect upon the nature,extent and timing of audit evidence if the auditor assessment of internal controls of the client indicates that a higher degree of residual risk remains in account balances?

• A)Gather less persuasive evidence.
• B)Smaller sample sizes.
• C)Gather more data at or after year end.
• D)All of these effects on the nature,extent and timing of audit evidence are applicable.

---

Definitions:

Budgeting

The process of creating a plan to spend your money, outlining expected revenues and expenses.

Activity Variance

The difference between planned levels of activity and actual levels, often analyzed to improve budgeting and operational efficiency.

Wages And Salaries

Payments made by businesses to their workforce, which may be calculated on an hourly, daily, or yearly basis, encompassing both fixed salaries and variable wages.

Budgeting

The process of preparing detailed financial plans, forecasting revenues and expenditures, and setting financial goals.