Which of the following statements is correct regarding risk analysis?
A) The extent to which management judgments are required in an area could serve as a risk factor in assisting the auditor in making a comparative risk analysis.
B) The highest risk assessment should always be assigned to the area with the largest potential loss.
C) The highest risk assessment should always be assigned to the area with the highest probability of occurrence.
D) Risk analysis must be reduced to quantitative terms in order to provide meaningful comparisons across an organization.

Question

Quizplus · Accepted Answer

Management judgments can introduce subjectivity and potential bias, making areas requiring such judgments riskier and important for auditors to consider in risk analysis.

Which of the Following Statements Is Correct Regarding Risk Analysis