Indicate Whether You Agree or Disagree with the Following Statements

question 69

Essay

Indicate whether you agree or disagree with the following statements and explain your reasoning.
a) Monica Callahan, the in-charge auditor, was explaining to her junior auditors why she was setting inherent risk high. "It is appropriate to set higher inherent risk for this company as our client is in an industry that is very competitive."
b) In selecting an appropriate materiality base, an auditor can choose an item from the balance sheet or income statement.
c) Randy Roberts has mentioned to his staff auditors that audit risk is based on factors that relate to the entity, while materiality is based on the user needs. As a result, materiality and audit risk are two concepts that need to be considered separately when considering material misstatements.
d) Shareep Kaur has determined control risk at a biochem company to be high. She plans to use a combined audit strategy.

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Definitions:

Thermostat

Any of a number of different types of heat sensing switches; a thermostat usually changes the status of a circuit or system when a specific temperature value is achieved. Found on starters and other electrical components, also used in an engine cooling system where it is used to option coolant circulation to the radiator.

Governor Cutout

A mechanism or setting in engines and machinery that limits the maximum speed or output to prevent damage or conserve energy.

Psi

Pounds per square inch, a unit of pressure used to quantify internal pressure, stress, or tensile strength.