Which of the following factors would lead an auditor to assess inherent risk at a higher level?
A)The account balance is easily determined without estimation.
B)The account balance is composed of a high volume of nonroutine transactions.
C)The account balance is composed of simple transactions.
D)All of the above would lead the auditor to assess a higher level of inherent risk.

Question

Quizplus · Accepted Answer

A higher volume of nonroutine transactions increases the likelihood of error or fraud, leading to a higher inherent risk level. Option A is incorrect because an easily determinable account balance does not necessarily correlate with inherent risk. Option C is incorrect because simple transactions generally pose a lower inherent risk. Option D is incorrect because not all factors lead to a higher inherent risk level.

Which of the Following Factors Would Lead an Auditor to Assess