Distinguish between inherent risk and control risk. How do internal controls and detection risk fit in?
Inherent risk is associated with the unique characteristics of the business or industry of the client. Firms in declining industries are considered to have more inherent risk than firms in stable or thriving industries. Control risk is the likelihood that the control structure is flawed because internal controls are either absent or inadequate to prevent or detect errors in the accounts. Internal controls may be present in firms with inherent risk, yet the financial statements may be materially misstated due to circumstances outside the control of the firm, such as a customer with unpaid bills on the verge of bankruptcy. Detection risk is the risk that auditors are willing to accept that errors are not detected or prevented by the control structure. Typically, detection risk will be lower for firms with higher inherent risk and control risk.
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Which of the following is not considered a category within the support value activities in a value chain analysis?
A. Technology development B. Firm infrastructure C. Outbound logistics D. Human resource management
Which lease provisions specifically guard against operating cost increases to the property owner?
a. graduated lease and percentage lease b. maintenance-increase-recoupment provision and net lease c. percentage lease and straight lease d. graduated lease and straight lease
Consistency is one of the two important principles of ________ upon which its universal laws are based
A) utilitarianism B) Kantian ethics C) Rawls's social justice theory D) moral relativism
The most important reason that dissatisfied customers are so significant is that they
A) usually ask for a refund. B) tend to not become a repeat customer. C) tell many other people about their dissatisfaction. D) fill consumer satisfaction surveys with exaggerated, negative comments.