Question

1. Refer to textbook chapter 3 and AU 315.04. The concepts of risk and internal control are related. Among management's many responsibilities one normally finds that setting and achieving objectives is of the highest priority. AU 315.04 defines business risk as: A risk resulting from significant conditions, events, circumstances, actions, or inactions that could adversely affect an entity's ability to achieve its objectives and execute its strategies or from the setting of inappropriate objectives and strategies. AU 315.04 also defines internal control: Internal control is a process effected by those charged with governance, management, and other personnel that is designed to provide reasonable assurance about the achievement of the entity's objectives with regard to the reliability of financial reporting, effectiveness and efficiency of operations, and compliance with applicable laws and regulations. Fill in the word combination that correctly completes the sentence. Internal control is used to the risks to achieving objectives. For financial reporting, an organization presumably has an objective of O a. enhance; reliable reporting O b. eliminate; unlock shareholder value O c. mitigate; reliable reporting O d. mitigate; assuring profitability O e. enhance; assuring profitability

Answer 1

As said in the paragraph business risks is a risk resulting from significiant conditions , events , crcumstances , actions , or inaction that could adversely effect an entity's ability to acheive its objectives and execute it's strategies or from the setting of inappropriate objectives and strategy

Now the internal control is a process to reduce the risks , it cannot be eliminated completely

So the first fill in the word is Mitigate

The main idea of a financial report reporting is the reliabilty of the data reported , if the relaibility of the report is gone there is no use in reporting

So For financial reporting , an organisation presumable has a objective of Reliable Reporting

So the correct answer is option c) Mitigate;Reliable Reporting