If an auditor has determined that the client has an excellent internal control structure:
A) the type of evidence required changes, but not the quantity.
B) the auditor can conclude that there is reasonable assurance that the financial statements do not contain material misstatements.
C) business risk is significantly reduced.
D) the amount of audit evidence to be collected might be reduced relative to a situation where the control structure is not adequate.

Question

Quizplus · Accepted Answer

If the auditor determines that the client has an excellent internal control structure, there is less risk of material misstatement in the financial statements. This means that the amount of audit evidence needed could be reduced relative to a situation where the control structure is not adequate. However, the type of evidence required would not change, and the auditor cannot automatically conclude that there is reasonable assurance that the financial statements are free from material misstatements. Business risk may also be reduced, but this is not directly related to the amount or type of audit evidence required.

If an Auditor Has Determined That the Client Has an Excellent