When the auditor is considering the risk of material misstatement, they will attempt to identify major risks, determine how these risks could relate to fraud or error, consider the importance of the risks, and ______.
A)notify management of these risks
B)attempt to immediately resolve any identified risks
C)determine the probability that the identified risks might result in material misstatements
D)determine who is responsible for each identified risk

Question

Quizplus · Accepted Answer

The auditor will consider the probability that the identified risks might result in material misstatements in order to assess the level of risk and determine the appropriate response. While notifying management of these risks is important, it is not the only step in the process. Likewise, attempting to immediately resolve identified risks may not always be possible or practical without further assessment. Determining responsibility for identified risks is also an important step, but it does not address the risk itself.

When the Auditor Is Considering the Risk of Material Misstatement