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11. S1: For financial reporting purposes, an entity’s risk assessment process includes its identification, analysis, and management of risks relevant to the preparation of financial statements in accordance with applicable financial reporting framework.  S2: The risk of material misstatement is broader in scope compared to business risks.

11. S1: For financial reporting purposes, an entity’s risk assessment process includes its identification, analysis, and management of risks relevant to the preparation of financial statements in accordance with applicable financial reporting framework.  S2: The risk of material misstatement is broader in scope compared to business risks.

Auditing: A Risk Based-Approach to Conducting a Quality Audit
Auditing: A Risk Based-Approach to Conducting a Quality Audit
10th Edition
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter5: Professional Auditing Standards And The Audit Opinion Formulation Process
Section: Chapter Questions
Problem 39MCQ
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11. S1: For financial reporting purposes, an entity’s risk assessment process includes its identification, analysis, and management of risks relevant to the preparation of financial statements in accordance with applicable financial reporting framework. 
S2: The risk of material misstatement is broader in scope compared to business risks. 

Group of answer choices 

Both S1 and S2 are incorrect. 

Only S2 is correct. 

Both S1 and S2 are correct. 

Only S1 is correct. 

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