Answer:
The correct answer is B. Maintenance of control over unused checks.
Explanation:
Risk of material misstatement is the risk that the financial statements contain material misstatements prior to the performance of the audit. The risk comprises two components, described as follows, in the statements:
Inherent risk - Susceptibility of a statement about a type of transaction, accounting balance or other disclosure of information to a misstatement that could be material, either individually or in aggregate with other inaccuracies, before taking into account the possible corresponding controls.
Control risk - Risk that an error that could exist in a statement about a type of transaction, accounting balance or other information relief, and that could be material either individually or in aggregate with other inaccuracies, is not prevented, or detected and corrected in a timely manner, by the entity's internal control system.
"A copywriter at an ad agency writes detailed copy for Internet advertisements. It is an intense, grueling job—the copywriter usually writes copy for up to 50 ads a day. Although he received little feedback, he feels pride in his work and continues to be motivated to do a good job."
"An environmental engineer working for a solar panel company runs experiments determining the capacity of smaller solar panels made out of different types of materials. She submits her results to her supervisor along with her opinion on the economic value of each type of panel but is not informed if her work results in products that are successfully sold in the market."
These employee behavior confirm the theories of Elton Mayo
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