An auditor who concludes that a control is functioning properly when,in fact,it is not has committed the
A) Risk of underreliance.
B) Risk of overreliance.
C) Risk of incorrect acceptance.
D) Risk of incorrect rejection.

Question

Quizplus · Accepted Answer

The auditor who concludes that a control is functioning properly when it is not has committed the risk of overreliance. Overreliance occurs when the auditor places too much faith in the effectiveness of the client's internal controls and therefore fails to detect material misstatements in the financial statements.

An Auditor Who Concludes That a Control Is Functioning Properly