When an auditor identifies unexpected misstatements or errors, he/she will
A) re-evaluate the effectiveness of internal controls and overall assessment of risk.
B) plan to conduct predominately substantive tests.
C) increase the level of tests of internal controls.
D) none of the above

Question

Quizplus · Accepted Answer

If unexpected misstatements or errors are identified, the auditor will need to re-evaluate the effectiveness of internal controls and overall assessment of risk to understand why such errors exist and identify any underlying risks to the accuracy of the financial statements. This will help the auditor determine whether substantive tests are necessary or not. Increasing the level of tests of internal controls may also be warranted to ensure that the cause of the errors has been adequately addressed.

When an Auditor Identifies Unexpected Misstatements or Errors, He/she Will