When planning to perform an audit, an accountant must have a clear understanding of audit risk and its components. The existing audit risk components consist of: 1. Control Risk 2. Detection Risk 3. Inherent Risk For each of the following situations, determine the component of audit risk that exists and explain why. 1. There is no adequate separation of duties and responsibilities. 2. The required substantive test procedure is not performed by the auditor. 3. Technology makes the client's company's products lagging and unsold. 4. The client lacks working capital to continue the business.
When planning to perform an audit, an accountant must have a clear understanding of audit risk and its components. The existing audit risk components consist of: 1. Control Risk 2. Detection Risk 3. Inherent Risk For each of the following situations, determine the component of audit risk that exists and explain why. 1. There is no adequate separation of duties and responsibilities. 2. The required substantive test procedure is not performed by the auditor. 3. Technology makes the client's company's products lagging and unsold. 4. The client lacks working capital to continue the business.
Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter3: Internal Control Over Financial Reporting: Responsibilities Of Management And The External Auditor
Section: Chapter Questions
Problem 39CYBK
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When planning to perform an audit, an accountant must have a clear understanding of audit risk and its components.
The existing audit risk components consist of:
1. Control Risk
2. Detection Risk
3. Inherent Risk
For each of the following situations, determine the component of audit risk that exists and explain why.
1. There is no adequate separation of duties and responsibilities.
2. The required substantive test procedure is not performed by the auditor.
3. Technology makes the client's company's products lagging and unsold.
4. The client lacks working capital to continue the business.
please answer all
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