Audit risk is composed of 3 factors. Which of the following is NOT one of those factors? a. Compliance risk b. Detection risk c. Control risk d. Inherent risk

An auditor must understand audit risk and its components when planning a financial report audit. The firm of Thomas & Fine evaluates the risk of material misstatement by disaggregating it into its three components: inherent risk, control risk and detection risk.RequiredFor each situation in the table below, select the component of audit risk that is most directly illustrated. The components of audit risk may be used once, more than once, or not at all. SITUATIONCOMPONENT OF AUDIT RISK(a) Segregation of duties is inadequate. (b) Confirmation of receivables by an auditor fails to detect a material misstatement. (c) Cash payments have occurred without proper approval. (d) A client, Expo Ltd, has a large cash balance. (e) A necessary substantive audit procedure has been omitted. (f) Technological innovations within the industry have caused a major product to become obsolete. (g) A client, Rocket Ltd, has insufficient working capital to continue its operations.

Explain the components of audit risk

Which of the following is a common fraud risk factor according to internal auditing standards?Group of answer choicesIneffective communication channelsAdequate employee trainingTransparent financial reportingStrong ethical culture

If inherent risk is high and control risk is medium, then:   a.The level of audit risk and detection risk are both medium.b.Detection risk is low.c.Detection risk is high.d.The level of audit risk is high.e.The level of audit risk is low.

Which of the following business characteristics is not indicative of high inherent risk? A. Operating results that are highly sensitive to economic factors. B. Large likely misstatements detected in prior audits. C. Substantial turnover of management. D. A large amount of assets.