Jennings and Company has repositioned the firm's business strategy from the basis of competing on costs to competing on product differentiation. All the following will increase, except:

Question

Quizplus · Accepted Answer

Repositioning the firm's business strategy from competing on cost to competing on product differentiation will not increase audit risk. Audit risk is based on the likelihood that the financial statements are materially misstated, which is not directly affected by changes in business strategy. However, business risk, financial risk, and risk of material misstatements may increase when transitioning to a new business strategy.

Jennings and Company Has Repositioned the Firm's Business Strategy from the Basis