In an audit, the purpose of risk assessment is to ________.
A)form an ultimate opinion on the financial statements based on management's directives
B)assess the combined inherent, control and detection risks to evaluate the likelihood that material misstatements could occur in the financial statements.
C)audit the system of internal control only
D)ultimately ensure that the internal audit function is performing properly

Question

Quizplus · Accepted Answer

The purpose of risk assessment in an audit is to assess the combined inherent, control, and detection risks to evaluate the likelihood that material misstatements could occur in the financial statements. This helps the auditor to plan the audit procedures and determine the appropriate level of substantive testing required. Options A, C, and D are not correct as they are not the primary purpose of risk assessment.

In an Audit, the Purpose of Risk Assessment Is to ________