Question

Which of the following is not an example of conditions and events that may indicate the existence of risks of material misstatement?

A)A significant change in the entity's industry or regulatory environment.
B)Management's lack of expertise in financial reporting.
C)A history of reliable financial reporting by the entity.
D)Rapid technological advancements impacting the industry.

Answer 1

A history of reliable financial reporting by the entity s not an example of conditions and events that may indicate the existence of risks of material misstatement. Option c

Step-by-step explanation:

Conditions and events that may indicate the existence of risks of material misstatement in financial reporting include significant changes in the entity's industry or regulatory environment, management's lack of expertise in financial reporting, and rapid technological advancements impacting the industry.

However, a history of reliable financial reporting by the entity is not an example of a condition or event that may indicate the existence of risks of material misstatement. If an entity has consistently provided reliable financial reports in the past, it suggests that the entity has effective internal controls and processes in place to prevent material misstatements. Option c