Question

Which of the following audit risk components may be assessed in nonquantitative terms?

a. Control Detection Inherent
b. Risk Risk Risk
c. Yes No Yes
d. Yes Yes Yes
e. No Yes Yes
f. Yes Yes No

Answer 1

In audit risk assessment, control risk, detection risk, and inherent risk can all be evaluated in nonquantitative terms. Auditors use a mixture of qualitative and quantitative methods to ascertain the risk levels associated with an audit.

Step-by-step explanation:

The direct answer to the question - which of the following audit risk components may be assessed in nonquantitative terms - is d. Yes Yes Yes. Audit risk components including control risk, detection risk, and inherent risk can all be assessed in nonquantitative, or qualitative, terms.

Audit risk is a fundamental concept in auditing that represents the risk that an auditor might issue an incorrect opinion on financial statements. Control risk is related to the effectiveness of a client's internal controls in preventing or detecting material misstatements. Detection risk pertains to the auditor's procedures and whether they can detect material misstatements. Inherent risk involves the susceptibility of an account balance or class of transactions to material misstatement, irrespective of related controls.

Auditors often use a mix of quantitative and qualitative assessments to evaluate these risks. For instance, while some components like detection risk might be inferred from statistical models, understanding the control environment within a client's business largely depends on professional judgement and qualitative assessment.