Which of the following is an accurate statement regarding inherent risk? A) Inherent risk has no...
Which of the following is an accurate statement regarding inherent risk?
A) Inherent risk has no impact on the amount of evidence gathered.
B) Auditors are generally conservative in setting inherent risk.
C) The profession has established guidelines for setting inherent risk.
D) Factors impacting inherent risk will affect all cycles, balances, and disclosures.
Homework Answers
Option B is correct i.e. Auditors are generally conservative in setting inherent risk.
Reason:-
Assessment of inherent risk is more subjective in nature than other components of audit. Factors considered on setting inherent risk is economy, industry and previous misstatements findings.
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