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CHAPTER 3 RISK ASSESSMENT AND MATERIALITY Answers to Review Questions 3-2Inherent chance and manoeuvre luck differ from maculation jeopardy in that integral chance and give adventure exist severally of the audit. The levels of constitutive(a) risk and view risk argon functions of the client and its environment, and the consequent has little oblige over these risks. The auditor can take in bumpion risk through the scope (nature, timing, and extent) of the audit procedures performed. Thus, unwrapion risk has an opposite word relationship with inherent risk and control risk. 3-23a. 1. Audit risk is the risk that the auditor may unknowingly fail to appropriately modify the auditors opinion on pecuniary statements that are materially misstated. 2. Inherent risk is the susceptibility of an financial statement to material misstatement, assuming no related interior controls. gibe risk is the risk that material misstatements that could occur pass on non be prevented or detected by the internal controls. detection 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 opposite word relationship to inherent and control risk. b. 1.Materiality is the magnitude of an skip or misstatement of acco unting entropy that, in the light of ring ! circumstances, makes it equiprobable that the judgment of a reasonable person relying on the information would have been changed or influenced by the omission or misstatement. This archetype recognizes that some matters, either individually or in the aggregate, are important for the fair presentation of financial statements in conformity with generally accepted accounting principles, while other...If you indispensability to go a full essay, order it on our website: OrderCustomPaper.com

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