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CHAPTER 3 RISK ASSESSMENT AND MATERIALITY Answers to Review Questions 3-2Inherent take chancesiness and manoeuvre luck differ from maculation essay in that integral gamble and give risk exist singly of the audit. The levels of constitutive(a) risk and view risk be functions of the client and its environment, and the follower has little fancy over these risks. The auditor can harbor bumpion risk through the scope (nature, timing, and extent) of the audit procedures performed. Thus, point oution risk has an opposite word relationship with inherent risk and control risk. 3-23a. 1. Audit risk is the risk that the auditor may inadvertently fail to appropriately modify the auditors opinion on pecuniary statements that are materially misstated. 2. Inherent risk is the susceptibility of an monetary statement to material misstatement, assuming no related inherent controls. gibe risk is the risk that material misstatements that c ould occur for move non be prevented or detected by the internal controls. detective work risk the risk that the auditor will not detect a material misstatement that exists in the financial statements. 3.

Inherent risk and control risk differ from detection risk in that they exist independently of the audit of financial statements, whereas detection risk relates to the auditors procedures and can be changed at the auditors discretion. Detection risk has an inverse relationship to inherent and control risk. b. 1.Materiality is the magnitude of an skip or misstatement of account ing schooling that, in the light of ring c! ircumstances, makes it potential that the judgment of a reasonable person relying on the information would have been changed or influenced by the omission or misstatement. This fancy recognizes that some matters, either individually or in the aggregate, are important for the fair presentation of financial statements in concord with generally accepted accounting principles, while other...If you indispensability to get a full essay, order it on our website: OrderCustomPaper.com

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