If inherent risk is determined to be high for an account or assertion, the next step is to _______.
A)determine if an internal control is in place to mitigate the risk of a material misstatement
B)determine if professional skepticism is being used
C)determine whether management is aware of the risk
D)perform less extensive detailed substantive tests

Question

Quizplus · Accepted Answer

When inherent risk is determined to be high for an account or assertion, the auditor should identify existing internal controls, and determine whether any can be relied on to reduce the assessed level of risk. If there are no effective internal controls or the controls cannot be relied upon, the auditor will need to perform more substantive testing to obtain sufficient appropriate evidence.

If Inherent Risk Is Determined to Be High for an Account