The ultimate purpose of control risk assessment is to:
A) Estimate the overall risk of failing to detect material misstatements.
B) Decide the nature, timing, and extent of substantive procedures.
C) Determine the risk of incorrect acceptance.
D) Determine the probability that errors entered the accounts.

Question

Quizplus · Accepted Answer

The ultimate purpose of control risk assessment is to help the auditor make decisions regarding the nature, timing, and extent of substantive procedures. This involves evaluating the effectiveness of a company's internal controls and determining the level of risk associated with material misstatement. The overall goal is to design an audit plan that ensures all material misstatements are detected, while minimizing the risk of incorrect acceptance. Control risk assessment does not directly determine the probability of errors entering the accounts.

The Ultimate Purpose of Control Risk Assessment Is To