If Inherent Risk Is High and No Assurance Has Been

question 14

Multiple Choice

If inherent risk is high and no assurance has been obtained from controls testing,

• A) only overall analytical review procedures need to be performed to reduce detection risk to an acceptable level.
• B) no further substantive testing needs to be performed.
• C) extensive substantive procedures need to be performed to estimate the dollar value of any error in the account balance.
• D) none of the above

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Definitions:

1960s

A decade marked by significant social, political, and cultural change worldwide, including movements for civil rights and against the Vietnam War in the United States.

Technological Progress

Innovations and improvements in technology that can lead to more efficient production methods and economic growth.

Factor of Production

Inputs used in the production of goods or services to make an economic profit, including land, labor, capital, and entrepreneurship.

Perfectly Competitive

A market structure characterized by many buyers and sellers, homogeneous products, free entry and exit, and perfect information, leading to firms being price takers.