Why is the audit team more concerned with controlling the exposure to the risk of overreliance than with the risk of underreliance?
A) Only the risk of overreliance results in an incorrect audit decision.
B) The risk of underreliance is not related to the audit team's study and evaluation of internal control.
C) The risk of overreliance can ultimately result in the audit team's failing to reduce audit risk to acceptable levels.
D) The risk of underreliance can be controlled by performing tests of controls during the interim period.

Question

Quizplus · Accepted Answer

The risk of overreliance can lead to an incorrect audit decision, which ultimately can result in the audit team's failing to reduce audit risk to acceptable levels. This is because auditors may rely too heavily on information provided by the client, which could be inaccurate or incomplete, causing them to overlook material misstatements. On the other hand, the risk of underreliance can be controlled by performing additional tests of details or analytical procedures, and thus, it is a lower concern for the audit team.

Why Is the Audit Team More Concerned with Controlling the Exposure