Higher inherent risk traits are found where _______.
A)transactions or account balances are derived from significant estimates
B)transactions or account balances are easily confirmed with reliable sources
C)the client's industry is thriving
D)the client's location has minimal risk of being affected by a natural disaster

Question

Quizplus · Accepted Answer

Higher inherent risk traits are found where transactions or account balances are derived from significant estimates. When significant estimates are involved, there is a higher chance of misstatement due to the judgment involved in making the estimate. Therefore, inherent risk is higher in such cases.

Higher Inherent Risk Traits Are Found Where _______