Which of the following factors would lead an auditor to assess inherent risk at a higher level?
A)The account balance is easily determined without estimation.
B)The account balance represents an easily embezzled asset.
C)The account balance is composed of simple transactions.
D)All of the above would lead the auditor to assess a higher level of inherent risk.

Question

Quizplus · Accepted Answer

An account balance that represents an easily embezzled asset is more susceptible to material misstatement and fraud, which would lead the auditor to assess a higher level of inherent risk. Choices A and C do not necessarily indicate a higher inherent risk, as an easily determined or simple account balance may still carry risks of material misstatement or fraud.

Which of the Following Factors Would Lead an Auditor to Assess