As inherent risk decreases, audit expertise should normally increase.

Question

Quizplus · Accepted Answer

Inherent risk refers to the susceptibility of an account balance or class of transactions to misstatement that could be material, either individually or when aggregated with misstatements in other balances or classes, assuming that there were no related internal controls. Audit expertise relates to the auditor's understanding and skill set in auditing a particular area or industry. There is not a direct correlation where a decrease in inherent risk necessitates an increase in audit expertise. Instead, as inherent risk decreases, the auditor may assess that the risk of material misstatement is lower, which could affect the nature, timing, and extent of audit procedures, but does not inherently require increased audit expertise.

As Inherent Risk Decreases, Audit Expertise Should Normally Increase