Indicate Whether You Agree or Disagree with the Following Statements

question 38

Essay

Indicate whether you agree or disagree with the following statements and explain your reasoning.
a) Roxanne Deboer, 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) Tyler Rappaport 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) Paloma Schenker has determined control risk at a biochem company to be high. She plans to use a combined audit strategy.

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Definitions:

Marginal Revenue Curve

A graphical representation showing how marginal revenue varies as output quantity changes.

Monopolistically Competitive

A commercial framework where a large number of businesses market goods that are comparable, but not exact duplicates, providing them with a bit of control over market conditions.

Perfectly Competitive

A market structure characterized by a large number of small firms, identical products, and free entry and exit, leading to price-taking behavior.

Horizontal

Refers to something that is parallel to the horizon, often used in contrast with vertical; in economics, it may pertain to mergers between companies at the same stage of production.