which of these is the definition of client business risk? a. Risks affecting the business operations and potential outcomes of an organization's activities. b. The susceptibility of an assertion about a class of transaction, account balance, or disclosure to a misstatement that could be material, either individually or when aggregated with other misstatements, before consideration of any related controls. c. The risk that a misstatement that could occur in an assertion about a class of transaction, account balance, or disclosure and that could be material, either individually or when aggregated with other misstatements, will not be prevented, or detected and corrected, on a timely basis by the entity's internal control.

Question

Business

Breanna Farrell

28 June, 23:27

which of these is the definition of client business risk? a. Risks affecting the business operations and potential outcomes of an organization's activities. b. The susceptibility of an assertion about a class of transaction, account balance, or disclosure to a misstatement that could be material, either individually or when aggregated with other misstatements, before consideration of any related controls. c. The risk that a misstatement that could occur in an assertion about a class of transaction, account balance, or disclosure and that could be material, either individually or when aggregated with other misstatements, will not be prevented, or detected and corrected, on a timely basis by the entity's internal control.

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Answers (1)

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Riley Nielsen · Answer 1

The explanation of this question is given below in the explanation section.

Explanation:

In this question, three options are given, and asked which of these best define the defination of client business risk.

The correct option for this question is C

The risk that a misstatement that could occur in an assertion about a class of transaction, account balance, or disclosure and that could be material, either individually or when aggregated with other misstatements, will not be prevented, or detected and corrected, on a timely basis by the entity's internal control.

Why other Options are not correct/

A. Client business risk mostly detected by auditor. It is misstated into financial statement. It does not effect business operations

B. The susceptibility of an assertion about a class of transaction, account balance, or disclosure to a misstatement that could be material, either individually or when aggregated with other misstatements, before consideration of any related controls. This option is not correct. Becuase Client business risk will not be prevented, or detected and corrected, on a timely basis by the entity's internal control. It is detected by auditor mostly probably by the external auditor to the organization.