Which of the following characteristics of the client's management affects the risk of material misstatements in the financial report?
A) ability to respond to risk
B) ability to identify risk
C) philosophy and operating style
D) all of the above

Question

Quizplus · Accepted Answer

All three characteristics of the client's management- ability to respond to risk, ability to identify risk, and philosophy and operating style, affect the risk of material misstatements in the financial report. The client's ability to respond to risk affects their ability to implement adequate internal controls and respond to identified risks. The ability to identify risk affects the accuracy and completeness of financial reporting. The philosophy and operating style of management determine the ethical values and financial reporting culture of the organization.

Which of the Following Characteristics of the Client's Management Affects