Which of the following risks exposes the auditor to effectiveness losses?
A) Risk of assessing control risk too high, risk of incorrect acceptance.
B) Risk of assessing control risk too low, risk of incorrect rejection.
C) Risk of assessing control risk too high, risk of incorrect rejection.
D) Risk of assessing control risk too low, risk of incorrect acceptance.

Question

Quizplus · Accepted Answer

If the auditor assesses control risk too low, they may rely too heavily on the controls and not perform enough substantive procedures. This can lead to the risk of incorrect acceptance, where the auditor concludes that the financial statements are materially correct when in fact there are material misstatements. This exposes the auditor to effectiveness losses.

Which of the Following Risks Exposes the Auditor to Effectiveness