Why is the auditor more concerned with the risk of overreliance rather than the risk of underreliance?
A)The risk of underreliance is not a type of sampling risk.
B)The risk of overreliance exposes the auditor to an efficiency loss.
C)The risk of overreliance may result in the auditor failing to perform sufficient substantive procedures.
D)The risk of overreliance cannot be measured by the auditor during the sampling process.

Question

Quizplus · Accepted Answer

If the auditor becomes over-reliant on internal controls, they may not perform sufficient substantive procedures, which increases the risk of material misstatement going undetected. This risk can lead to audit failure. On the other hand, the risk of underreliance means that the auditor is not placing an appropriate level of assurance on internal controls, which can reduce audit efficiency, but is unlikely to result in audit failure. Therefore, the auditor is more concerned with the risk of overreliance.

Why Is the Auditor More Concerned with the Risk of Overreliance