What should occur when a low level of Detection Risk is acceptable?

Q: Outline the weaknesses of sensitivity analysis

A: Sensitivity analysis uses in capital budgeting for measuring the risk in project. It helps in…

Q: What determines the acceptable level of Detection Risk?

A: Detection Risk:   It is a chance that an auditor will fail to identify any material misstatement…

Q: Explain the types of risk?

A: Introduction: There is a risk involved in any company decision, and in personal life decisions. In…

Q: Which of the following would not result in exposure to nonsampling risk?a. Measuring the…

A: Sampling: Sampling allows an individual to obtain information about the population of interest in a…

Q: Define stand-alone risk

A: Stand-alone risk:This refers to the risk linked with a single aspect of a firm or any particular…

Q: What is the risk of Incorrect Rejection?

A: Risk of incorrect acceptance of internal control reliability and risk of incorrect acceptance of…

Q: What are risk assessments?

A: Risk assessment means identification of risk faced by a business organization that hampers it from…

Q: What items could increase the risk of material misstatement?

A: Risk of material misstatement (ROMM) is a risk that the financial statements when audited will…

Q: what is control risk

A:

Q: What is a scenario analysis? What is it designed to show, and how does it differ froma sensitivity…

A: Scenario analysis is the technique of analyzing the portfolio to find out the expected value of…

Q: Discuss some of the techniques available to reduce risk exposures.

A: Risk exposure is the estimated potential loss from ongoing or upcoming business operations. The…

Q: Explain risk of overreliance and risk of underreliance in brief.

A: Due to material misstatement, an auditor probably render  an unqualified opinion on the state of…

Q: What are quantitative measurements versus non-quantitative measurements with respect to risk?

A: Risk is used to describe the probability or uncertainty related to a future event with a favorable…

Q: What is takaful and how it can be used as a risk mitigation tool and write down the names of types…

A: Takaful may be a style of monotheism insurance whereby members contribute cash into a pool system to…

Q: what are the conditions for classical immunization to be not effective?

A: Classical Immunization:- Classical immunization can be characterized as the formation of a fixed-pay…

Q: What is Non-Sampling Risk?

A: Sampling: It is a procedure used by the auditor to analyze the predetermined number of observations…

Q: how does communication aid in assessing inherent risk, control risk and detection risk

A: Factors of Communication aid in Assessing Inherent Risk, Control Risk and detection Risk There are…

Q: What is event risk?

A: Event risk is the likelihood of a sudden event adversely affecting an organization, industry, or…

Q: Describe Detection Risk.

A: Risk: It is the uncertainty about the future events of the company. The adverse chances of choosing…

Q: What responses should an auditor take based on different levels of acceptable detection risk (DR)?…

A: There are different ways an auditor responds to fraud risks that are assessed and it depends upon…

Q: How is sampling risk controlled?

A: Sampling: Sampling allows an individual obtain the information about the population of interest in…

Q: ) What deficiencies in IRR can be overcome by using MIRR?

A: Introduction : Internal rate of return, commonly referred to as the IRR, can be understood as the…

Q: How does the use of scenarios differ from sensitivity analysis?

A: Sensitivity analysis and scenario analysis are the assessment techniques that are used in investment…

Q: Define control risk and detection risk. What is the difference between control risk and detection…

A: Auditing:   In auditing, auditors verify the correctness and fair presentation of financial…

Q: What happens when Control Risk is assessed to be at the maximum level?

A: Control risk Control Risk refers to the type of audit risk which evaluates the misstatement of…

Q: What three techniques are used to assess stand-alone risk?

A: Stand-alone risk: Stand-alone risk is the risk related with the anticipated project cash flow. The…

Q: What is the risk of Incorrect Acceptance?

A: Risk of incorrect acceptance: The risk that the sample selected by the auditor may show that there…

Q: What do "threat," "vulnerability," and "risk" really mean?

A: Threat : A declaration of purpose to cause someone pain, harm, damage, or other hostile action as…

Q: Discuss about systematic and unsystematic risk.

A: Risk refers to the movement or fluctuation in the value of an investment. The movement can be…

Q: What is Projected Misstatement?

A:

Q: Discuss some of the techniques available to reduce risk exposure.

A: Risk exposure means possible losses which can be occur in future due to specific projects or…

Q: There is no need to perform substantive tests procedures if the control risk is determined to be…

A: Auditing means the independent checking of company operation by outsider. Auditor is a qualified and…

Q: Discuss the Beta of  as measure of systematic risk.

A: In finance systematic risk refers to that risk which is inherent to the entire market. As the risk…

Q: What is the Allowable Risk of Over-reliance?

A: Auditor has to test the account balances and classes of transactions and has to do both control…

Q: Identify the weakness and the risk relating to the above.

A: Answer: The weakness is the shortcoming in any process and risk is the factor that result due to…

Q: Risk of material misstatements increases if

A: Please see the next step for the solution

Q: How are the sufficiency and appropriateness of evidence related to detection risk?

A: Audit Evidence:   The pieces of evidence provided by the audit team to prove their opinion with…

Q: _________ factors are conditions and other variables that in their present, or absence, as the case…

A: Less start with basic understanding. For auditing being made, audit needs to make plan for…

Q: What is the relationship between Evidence and Detection Risk?

A: Detection risk is the risk that an auditor will not find a material misstatement in a client's…

Q: Why is it important to be able to quantify risk?

A: Risk is the chance that an outcome of an investment's actual gain will differ from an expected…

Q: True or false: The lower the materiality level, the higher the amount of required evidence from…

A: Auditing means the independent checking of company operation by outsider. Auditor is  qualified and…

Q: Non-sampling risk, and more specifically the risk of assessing control risk too low (risk of…

A: Non-sampling risk is the risk that auditors make an incorrect conclusion for any reason that is not…

Risk Management Techniques

Risk management is the procedure of recognizing, analyzing, monitoring, and preventing the risks and threatening factors of investments and business. Risks can arise from various factors including internal controls, market changes, natural disasters, and failure in productions. Risk management techniques enable entities to control and minimize the risks as well as the threatening factors of the business and it also helps to improve the business.