Question

During the audit of JPG Enterprises, you discover that the industry has low risk of technological obsolescence. Which factor that influences inherent risk does this primarily relate to?

1) Reputation
2) Government regulation
3) Economy
4) Demand

Answer 1

The low risk of technological obsolescence discovered during the audit of JPG Enterprises primarily pertains to economic factors that influence inherent risk, indicating a stable demand and economic environment within the industry.

Step-by-step explanation:

During the audit of JPG Enterprises, when we discover that the industry has a low risk of technological obsolescence, this primarily relates to the factor that influences inherent risk pertaining to economy. This is because technological obsolescence can affect the economic environment of an industry, influencing its demand and stability. Economies that embrace rapidly changing technologies are at a higher risk for obsolescence, which can affect the inherent risks associated with the audit. In contrast, an industry with a low risk of technological obsolescence suggests a stable economic environment, in which the demand for the industry's products or services may remain consistent over time.