* Your answer is incorrect. Gladco Partners CPA Firm has been invited to consider auditing the firm of McRoss LLC, a medium sized firm and provider of outsourced payroll services. One of the CPA firms' staff associates asks you, their supervisor, what the risks surrounding inventory will be for this client. Which of the following is the most accurate response? Audit risk associated with inventory is likely to be assessed as high because the client maintains either very small amounts or no inventory. Control risk associated with inventory misstatement is likely to be assessed as low by the audit firm, upon completion of substantive testing of internal controls. • Inherent risk associated with inventory misstatement is likely to be assessed as low by the CPA firm. O Inherent risk associated with inventory misstatement is likely to be assessed as high by the CPA firm.
* Your answer is incorrect. Gladco Partners CPA Firm has been invited to consider auditing the firm of McRoss LLC, a medium sized firm and provider of outsourced payroll services. One of the CPA firms' staff associates asks you, their supervisor, what the risks surrounding inventory will be for this client. Which of the following is the most accurate response? Audit risk associated with inventory is likely to be assessed as high because the client maintains either very small amounts or no inventory. Control risk associated with inventory misstatement is likely to be assessed as low by the audit firm, upon completion of substantive testing of internal controls. • Inherent risk associated with inventory misstatement is likely to be assessed as low by the CPA firm. O Inherent risk associated with inventory misstatement is likely to be assessed as high by the CPA firm.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Kai.1
Transcribed Image Text:* Your answer is incorrect.
Gladco Partners CPA Firm has been invited to consider auditing the firm of McRoss LLC, a medium sized firm and provider of
outsourced payroll services. One of the CPA firms' staff associates asks you, their supervisor, what the risks surrounding inventory will
be for this client. Which of the following is the most accurate response?
Audit risk associated with inventory is likely to be assessed as high because the client maintains either very small amounts
or no inventory.
• Control risk associated with inventory misstatement is likely to be assessed as low by the audit firm, upon completion of
substantive testing of internal controls.
• Inherent risk associated with inventory misstatement is likely to be assessed as low by the CPA firm.
O Inherent risk associated with inventory misstatement is likely to be assessed as high by the CPA firm.
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