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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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