Audit Risk in the Audit Risk Model Concerns the Risk

question 82

Multiple Choice

Audit risk in the audit risk model concerns the risk that the auditor may issue an unqualified opinion on financial statements that are materially misstated.What is the manner in which the auditor assesses audit risk in using the audit risk model to determine the nature,extent and timing of audit evidence to collect in an audit.

• A)assessed to maintain low level of audit risk given residual risk
• B)assessed to maintain low level of audit risk given financial statement risk
• C)assessed to maintain a low level of audit risk given engagement risk
• D)assessed to maintain a low level of audit risk given enterprise risk

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Definitions:

Mismanagement Decisions

Poor or inefficient decisions made in the management of a company that can lead to negative outcomes or failure.

Small Businesses

Enterprises characterized by a small number of employees, limited revenue, and often locally based, playing a significant role in the economy.

Industry Average Analysis

A comparison of a firm’s financial ratios to the industry averages.

Industry Leaders

Companies that dominate their market sectors, often characterized by high market share, innovation, and reputation.