12. when discussing acceptable audit risk (AAR) and the audit risk model which of the following statements is true

		A. AAR is objectively determined by the auditor
		B. When the auditor decides on a lower acceptable audit risk it means the auditor wants to be more certain that the financial statements are not materially misstated
		C. AAR is the risk that the auditor is willing to take that the financial statements are fairly stated
		D. The terms audit assurance overall assurance or level of assurance are synonyms for AAR

13. When discussing control risk (CR) and the audit risk model, which of the following statements not true?

		A. If the auditor concludes that internal control is completely ineffective to prevent or detect errors he/she would assign a 0% to CR
		B. CR is a measure of the auditors assessment of the likelihood that errors will not be prevented or detected by the clients internal control
		C. The relationship between control risk and evidence is direct
		D. There is no relationship between control risk and inherent risk

14.

Inherent risk is often high for an account such as

		A. Cash
		B. Land
		C. Prepaid insurance
		D. Notes payable

15. Which of the following statements regarding inherent risk is correct

		A. Most auditors set a low inherent risk in the first year of an audit and increase it if experience shows that it was incorrect
		B. Inherent risk is unaffected by the auditors experience with clients organization
		C. Most auditors set a high inherent risk in the first year of an audit and reduce it in subsequent years as they gain experience
		D. Inherent risk is dependent upon the strengths in clients internal control system