An Auditor Assesses Management's Ability to Identify and Respond to Its

question 12

Multiple Choice

An auditor assesses management's ability to identify and respond to its business risks because:

• A)It reduces the auditor's risk of accepting the audit engagement
• B)It reduces the amount of planned audit evidence.
• C)It reduces the risk of material misstatement at the financial statement level.
• D)It reduces the preliminary assessment of materiality.

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Definitions:

Continental Crust

The thick, generally older part of the Earth's crust that constitutes the continents and continental shelves, distinct from oceanic crust.

Psychosocial Problems

Issues affecting an individual's psychological development in and interaction with a social environment.

Negative Feedback

Communication that conveys dissatisfaction or identifies areas of improvement, often used as a tool for personal or organizational development.

Encoder Problems

Issues related to the malfunctioning or inefficiency of encoders, devices that convert information from one format to another, especially in digital communications.