b. The procedures to be applied on a particular engagement are a matter of the auditor's professional judgment. Show Choice "b" is correct. The nature of tests to be applied on a particular engagement is a matter of the auditor's professional judgment. Choice "c" is incorrect. The use of test of controls should be considered when deciding the level of assurance required and the nature of tests to be used. For example, if test of controls indicate that controls are not operating effectively, this will result in a lower detection risk. As the acceptable level of detection risk decreases, the assurance provided from substantive procedures should increase. In this case, the auditor may change the nature of substantive tests from a less effective to more effective procedure. What does it mean when the assessed control risk is high?The whole point of performing controls testing is to assess control risk. If control risk is high, then the audit team team would conclude that controls are not operating effectively and they will not rely the company's internal controls.
When the assessed level of control risk is low the auditor should?Regardless of the assessed level of control risk, the auditor should perform substantive procedures for all relevant assertions related to all significant accounts and disclosures in the financial statements.
At what level is the planned assessed level of control risk?Auditors set a planned assessed level of control risk in audit planning. The planned assessed level is based on assumptions about the quality of the internal control structure. An actual assessed level of control risk is set for each assertion based on evidence about internal controls.
What causes audit risk to increase?Audits that were weak or biased or audits in which auditors ignored material misstatements intentionally could increase the level of inherent risk. Transactions between related entities could also increase the level of inherent risk.
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When an auditor increases the planned assessed level of control risk the auditor would most likely increase the?
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