Describe what is meant by acceptable audit risk. Explain whyeach of the following statements is true:a. A CPA firm should attempt to achieve the same audit risk for all audit clients whencircumstances are similar.b. A CPA firm should decrease acceptable audit risk for audit clients when external usersrely heavily on the statements.c. A CPA firm should decrease acceptable audit risk for audit clients when engagementrisk is high.d. Different CPA firms should attempt to achieve reasonably similar audit risks forclients with similar circumstances
Describe what is meant by acceptable audit risk. Explain whyeach of the following statements is true:a. A CPA firm should attempt to achieve the same audit risk for all audit clients whencircumstances are similar.b. A CPA firm should decrease acceptable audit risk for audit clients when external usersrely heavily on the statements.c. A CPA firm should decrease acceptable audit risk for audit clients when engagementrisk is high.d. Different CPA firms should attempt to achieve reasonably similar audit risks forclients with similar circumstances
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Describe what is meant by acceptable audit risk. Explain why
each of the following statements is true:
a. A CPA firm should attempt to achieve the same audit risk for all audit clients when
circumstances are similar.
b. A CPA firm should decrease acceptable audit risk for audit clients when external users
rely heavily on the statements.
c. A CPA firm should decrease acceptable audit risk for audit clients when engagement
risk is high.
d. Different CPA firms should attempt to achieve reasonably similar audit risks for
clients with similar circumstances
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