11. (LO 2) Wells Fargo suffered significant damage as a result of ignoring a. reputational risk. b. compliance risk. C. strategic risk. d. physical risk.
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- 28. Which of the following is the root cause of risk? Group of answer choices Customer dissatisfaction Loss of assets None of the choices Erroneous decisions Erroneous decisions6. Inherent risk is the susceptibility of an account balance, class of transactions or disclosure to material misstatement given inherent and environmental characteristics, but without regard to internal control. Required:Identify and discuss five (5) factors that affect inherent risk at the financial report level.6. True or False: Residual risk is the risk that exists once risk responses have been implemented in an organization. A True B False
- tch the type of risk with the related definition.A. Detection riskB. Control riskC. Inherent riskD. Audit risk___ 1. The probability that an auditor will give an inappropriate opinion on financial statements.___ 2. The probability that audit procedures will fail to produce evidence of material misstatements.___ 3. The probability that the client's internal control policies and procedures will fail to detect material misstatements if they have entered the accounting system.___ 4. The probability that material misstatements have occurred in transactions entering the accounting system.Below are events, for each event, identify the type of risk the event entails, classify your identified risk as either systematic or unsystematic risk; Economic distress Mismanagement Technological causes Working capital problems Fraudulent management.q2- Which of the following is NOT a type of news that contributes to unsystematic risk? Select one: a. Company-specific news. b. Industry-specific news. c. Market-wide news. d. None of the above. (In other words, ALL of the above types of news contribute to unsystematic risk.)
- The risk that a client's financial statements are susceptible to material misstatements is a. control risk b. inherent risk c. audit risk d. none of the aboveWhich of the following does NOT describe inherent risk? O tends to be driven by the nature of the business or account O risk a misstatement occurs irrespective of any controls determined by the effectiveness of internal controls O auditor cannot influence inherent risk12. The audit of revenue and receivables is of significant audit risk because Select one:a. The understatement of revenue results in a corresponding overstatement of net incomeb. Understatement of revenue has been a factor in many instances of fraudulent financial reportingc. Overstatement of revenue has been a factor in many instances of fraudulent financial reporting,d. The overstatement of revenue results in a corresponding understatement of net income
- LO 5 The following are the key types of risk that audit firms considerwhen they make client acceptance and continuance decisions. Provideexamples of each of these types of risks.• Client entity characteristics• Independence risk factors• Third-party/due diligence risk factors• Quantitative risk factors• Qualitative risk factors• Entity organizational or governance risks• Financial reporting risks1. Please explain Audit of Long-term Liabilities 2. Please explain ISA540 and AU-C540. 3. What are the indicators of possible management bias of ISA540 and AU - C 540 standards. 4. Please explain whether the presence of an indicator of management bias means there is a material misstatement.Necessary: (a) In the given situation, who took the larger risk: Khaled Assadi or Kyle Lagow. (a) Explain your reasoning by referring to (a). (c) Discuss if GE Energy's claimed conduct is more unethical than Countryside Financial's conduct.
