An Auditor Considers Two Factors in Understanding Business Risks

question 31

Multiple Choice

An auditor considers two factors in understanding business risks.What are they?

• A)The likelihood of a risk occurring and the materiality of the risk.
• B)The magnitude of the risk and the type of risk.
• C)The likelihood of the risk occurring and the type of risk.
• D)The likelihood of a risk occurring and the magnitude the risk.

---

Definitions:

Target Company

A company that is the object of a takeover by another firm, which may involve a merger, acquisition, or purchase of a significant portion of its shares.

Corporate Dissolution

The formal and legal process of dissolving or ending the existence of a corporation, which involves settling debts and distributing remaining assets.

Secretary of State

A high-ranking government official, often involved in foreign affairs or the head of a governmental department, depending on the country.

Deadlocked Corporation

A situation where the directors or shareholders of a corporation are unable to reach a consensus, halting decision-making processes.