Question

Which of the following is not an underlying principle related to risk assessment?

A) The organization should have clear objectives in order to be able to identify and assess the risks relating to the objectives.
B) The auditors should determine how the company's risks should be managed.
C) The organization should consider the potential for fraudulent behavior.
D) The organization should monitor changes that could impact internal controls.

Answer 1

B) The auditors should determine how the company's risks should be managed is not an underlying principle of risk assessment as it's the management's role to determine how to manage risks.

Step-by-step explanation:

The option that is not an underlying principle related to risk assessment is B) The auditors should determine how the company's risks should be managed. Risk assessment is a principle that requires the organization's management to identify, analyze, and respond to risks that might affect the achievement of its objectives. While auditors are responsible for evaluating the effectiveness of an organization's risk management processes, it is the management's role to determine how risks should be managed. Auditors may provide recommendations, but they do not manage the company's risks directly.

Risk assessment principles are part of risk management strategies and involve the organization having clear objectives (A), considering potential fraudulent behavior (C), and monitoring changes that could impact internal controls (D).