George Company, a CPA firm, conducted an audit for the 2020 financial statements of Simon Corporation. The auditors assessed the audit risk, control risk, and inherent risk to be 4%, 50%, and 80% respectively. Which of the following statements is correct?" There is 4% probability that the auditors' own procedures would fail to detect material misstatements There is 50% probability that the client's internal control activities would fail to prevent or detect material misstatements There is 50% probability that, in the absence of internal controls, material errors or frauds could enter the accounting system used to develop financial statements There is 50% probability that the auditors' own procedures would fail to detect material misstatements None of the above

George Company, a CPA firm, conducted an audit for the 2020 financial statements of Simon Corporation. The auditors assessed the audit risk, control risk, and inherent risk to be 4%, 50%, and 80% respectively. Which of the following statements is correct?" There is 4% probability that the auditors' own procedures would fail to detect material misstatements There is 50% probability that the client's internal control activities would fail to prevent or detect material misstatements There is 50% probability that, in the absence of internal controls, material errors or frauds could enter the accounting system used to develop financial statements There is 50% probability that the auditors' own procedures would fail to detect material misstatements None of the above

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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