Which of the Following Statements Regarding Inherent Risk Is Correct

question 33

Multiple Choice

Which of the following statements regarding inherent risk is correct?

• A) Inherent risk is unaffected by the auditor's experience with client's organization.
• B) Most auditors set a low inherent risk in the first year of an audit and increase it if experience shows that it was incorrect.
• C) Most auditors set a high inherent risk in the first year of an audit and reduce it in subsequent years as they gain experience, even when there is inherent risk.
• D) Inherent risk is dependent upon the strengths in client's internal control system.

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Definitions:

Environment

The surrounding conditions and elements in which an organism operates, including natural, social, and built factors that influence life.

State Societies

Societies that have a formal central government, social stratification, and complex political, economic, and legal institutions.

Urban Areas

Regions characterized by high population density and vast human features in contrast to areas dominated by natural landscapes.

Tay-Sachs Alleles

Genetic variants associated with Tay-Sachs disease, a fatal genetic disorder that causes progressive destruction of the nervous system in infants and young children.