When the assessed level of inherent risk for material misstatement is not high,but the control risk is,the audit plan should call for:
A)Gathering a relatively low level of substantive audit evidence.
B)Gathering a moderately persuasive level of planned substantive evidence.
C)Performing extensive tests of controls to reduce control risk to an acceptably low level.
D)Gathering a highly persuasive level of substantive evidence.

Question

Quizplus · Accepted Answer

When the inherent risk is not high but the control risk is, the auditor should plan to gather a moderately persuasive level of planned substantive evidence. This approach balances the lower inherent risk with the higher control risk, aiming to obtain sufficient assurance about the financial statements without over-relying on controls that are deemed risky.

When the Assessed Level of Inherent Risk for Material Misstatement