What determines the acceptable level of Detection Risk?

Q: Explain the difference between unique risk and systematic risk

A: Answer

Q: What is the best-case scenario?

A: When companies are uncertain about the details of a project such as costs, inflows, interest rate…

Q: What is the risk of Incorrect Rejection?

A: Risk of incorrect acceptance of internal control reliability and risk of incorrect acceptance of…

Q: Why is the variance (or standard deviation) used as a measure of risk? What are the advantages and…

A: Reasons of utilizing variance as a risk measure: While consider a lesser risk in investment, fewer…

Q: What are the basic risk faced by financiwl intermediaries?

A: When two parties are transacting together and one person or entity is making the transaction easier…

Q: What is a scenario analysis? What is it designed to show, and how does it differ froma sensitivity…

A: Scenario analysis is the technique of analyzing the portfolio to find out the expected value of…

Q: Explain risk of overreliance and risk of underreliance in brief.

A: Due to material misstatement, an auditor probably render  an unqualified opinion on the state of…

Q: The process of determining which risks to insure and which applicants to reject is known as

A: Given information The process of determining which risks to insure and which applicants to reject…

Q: What is takaful and how it can be used as a risk mitigation tool and write down the names of types…

A: Takaful may be a style of monotheism insurance whereby members contribute cash into a pool system to…

Q: What is Non-Sampling Risk?

A: Sampling: It is a procedure used by the auditor to analyze the predetermined number of observations…

Q: how does communication aid in assessing inherent risk, control risk and detection risk

A: Factors of Communication aid in Assessing Inherent Risk, Control Risk and detection Risk There are…

Q: definition of political risk and how mitigate it?

A: Political risk are risk arising due to political parties of countries with change in government…

Q: What is event risk?

A: Event risk is the likelihood of a sudden event adversely affecting an organization, industry, or…

Q: What is the risk of assessing Control Risk too low?

A: Definition:   Tests of controls: Tests of controls form the part of audit procedures to be…

Q: Describe Inherent Risk.

A: Definition:   Audit Planning: Audit planning is the first step in the auditing process. The auditor…

Q: How is sampling risk controlled?

A: Sampling: Sampling allows an individual obtain the information about the population of interest in…

Q: Describe Control Risk

A: Audit Risk: The risk of issuing an unqualified audit report due to failure in detecting material…

Q: What happens when Control Risk is assessed to be at the maximum level?

A: Control risk Control Risk refers to the type of audit risk which evaluates the misstatement of…

Q: How does Sampling Risk compare to Non-Sampling Risk?

A: Risk:   It is a probability of the financial statements being materially incorrect even though the…

Q: What type of risk is measured by the standard deviation?

A: Standard deviation is the measure of risk that the actual return of an investment will deviate from…

Q: Explain political risk

A: Political risks are important to be considered because they have an impact on the profitability…

Q: Is funding a type of risk?

A: Funding means providing the funds to the party and charging interest rates from them. Firms need…

Q: What controls would you implement to

A: Internal Control system: Internal control system can be defined as the set of policies and…

Q: What should occur when a low level of Detection Risk is acceptable?

A: Detection risk is the risk that procedures performed to reduce audit risk will not detect a material…

Q: Discuss about systematic and unsystematic risk.

A: Risk refers to the movement or fluctuation in the value of an investment. The movement can be…

Q: What are some suggestions for risk management, typical response tactics, and IT system recovery…

A: Risk management:  A system of people, processes, and technology called risk management helps a…

Q: What principles are essential to an effective risk management program?

A: All types of organizations face different types of risks which may affect their chances of success.…

Q: Calculate the risk neutral probability

A: Risk neutral probability = (er*Δt - d)/(u-d) r is risk free rate. Δt is time period between each…

Q: what are the difference between Preventive Controls and Detective Controls?

A: Financial Reporting control activities are imposed on the accounting standard for the purpose of…

Q: What is the purpose for a Control Environment assessment?

A: Control environment: Control environment is one of the components of internal control over…

Q: Distinguish between: Systematic risk and Unsystematic risk

A: The risks faced by the company arises from both micro as well as macro levels. The risk arising out…

Q: What is objective risk

A: Risk means the possibility of happening loss. Risk is directly related to the loss. If the amount of…

Q: Identify the weakness and the risk relating to the above.

A: Answer: The weakness is the shortcoming in any process and risk is the factor that result due to…

Q: How are the sufficiency and appropriateness of evidence related to detection risk?

A: Audit Evidence:   The pieces of evidence provided by the audit team to prove their opinion with…

Q: Define risky event

A: Risk is the variability in expected return and the actual return. When the actual return is more…

Q: Why is it important to be able to quantify risk?

A: Risk is the chance that an outcome of an investment's actual gain will differ from an expected…

Q: What is the risk of assessing Control Risk too high?

A: Control risk refers to the probability of financial statements that were considered wrongly stated…

Q: Are you able to differentiate between risks that are inherent and those that can be controlled?

A: Inherent risk- A material mis-statement that occurs due to error or due to omission  in the…

Q: What advantage does scenario analysis have over sensitivityanalysis?

A: In finance, we are required to analyze the change in value of one variable over the change in the…

Q: Define risk of material misstatement.

A: Material misstatement represents the statement presented in the financial statement which is…

Q: One of the characteristics of an insurable risk is that a risk needs to be determinable and…

A: An insurable risk class is a group of people or businesses with similar characteristics that are…

Q: What is a sensitivity analysis?

A: Sensitivity analysis:Sensitivity analysis ascertains the manner in which the different values of an…