The assessment of inherent risk requires consideration of matters that have a pervasive effect on assertions for all or many accounts and matters that may pertain only to assertions for specific accounts. Which of the following is an example of a "pervasive effects" matter?
A) complexity of calculations.
B) management turnover, reputation, and accounting skills.
C) susceptibility to misappropriation.
D) sensitivity of operating results to economic factors.
E) difficult-to-audit accounts or transactions.

Question

Quizplus · Accepted Answer

Management turnover, reputation, and accounting skills are factors that can affect the entire organization and have a pervasive effect on the financial statements as a whole, impacting multiple accounts and assertions.

The Assessment of Inherent Risk Requires Consideration of Matters That