The assessment of inherent risk requires consideration of matters that have a pervasive effect on the entity as a whole and matters that may affect only specific accounts. Which of the following is an example of a "pervasive effects" matter?
A) industry of operation.
B) susceptibility to misappropriation.
C) sensitivity of valuations to economic factors.
D) all of the above.

Question

Quizplus · Accepted Answer

Pervasive effects matters are those that can impact the entity as a whole rather than just specific accounts. The industry of operation, susceptibility to misappropriation, and sensitivity of valuations to economic factors are all examples of matters that can have a widespread impact on an entity, affecting its overall risk profile.

The Assessment of Inherent Risk Requires Consideration of Matters That