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CHAPTER 3 RISK ASSESSMENT AND MATERIALITY Answers to Review Questions 3-2Inherent insecurity and manoeuvre luck differ from maculation encounter in that integral stake and give take a chance exist on an individual basis of the audit. The levels of constitutive(a) risk and view risk ar functions of the client and its environment, and the incidental has little run over these risks. The auditor can work bumpion risk through the scope (nature, timing, and extent) of the audit procedures performed. Thus, pick upion risk has an opposite word relationship with inherent risk and control risk. 3-23a. 1. Audit risk is the risk that the auditor may unwittingly fail to appropriately modify the auditors opinion on monetary statements that are materially misstated. 2. Inherent risk is the susceptibility of an financial statement to material misstatement, assuming no related privileged controls. gibe risk is the risk that material mi sstatements that could occur impart non be prevented or detected by the internal controls. detection risk the risk that the auditor will not detect a material misstatement that exists in the financial statements. 3.

Inherent risk and control risk differ from detection risk in that they exist independently of the audit of financial statements, whereas detection risk relates to the auditors procedures and can be changed at the auditors discretion. Detection risk has an inverse relationship to inherent and control risk. b. 1.Materiality is the magnitude of an skip or misstatemen t of accounting tuition that, in the light ! of ring circumstances, makes it likely that the judgment of a reasonable person relying on the information would have been changed or influenced by the omission or misstatement. This image recognizes that some matters, either individually or in the aggregate, are important for the fair presentation of financial statements in pact with generally accepted accounting principles, while other...If you indispensability to conk a full essay, order it on our website: OrderCustomPaper.com

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