Question

11. Which of the following independent risk factors is related to inherent risk? 1. There are...

11.

Which of the following independent risk factors is related to inherent risk?

1. There are no restrictions on warehouse access by employees.

2. Client engages in related party transactions.

3. Client is one of the largest clients in the industry based on its market share and size.

Group of answer choices

Item 2 and 3

None of the above

Item 2

Item 3

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Homework Answers

Answer #1

Item no 2 is correct answer

Inherent risk means risk of material misstatement in financial statement due to error & omission other tham failure of internal control.

Transaction among related party give rise to interent risk as financial transaction between them may be overrated or underrated.

Item 1 is an example of control risk

Item 3 is an example of acceptable audit risk

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