ACC551-Ch4

If inherent risk and control risk are low, the auditor can set detection risk as high.

• True

• False

Materiality is assessed during the risk assessment phase of every audit.

• True

• False

Key performance indicators used by a client to monitor its performance provide an auditor insight into which accounts are potentially at risk of misstatement.

• True

• False

Inventory turnover measures how many times a year a company collects cash from its debtors.

• True

• False

When classifying risks, significant consideration is not given to whether the risk

• is related to significant economic or accounting developments

• involves simple transactions

• involves significant related party transactions

• involves fraud