After obtaining an understanding of the entity's internal control and assessing control risk, an auditor of a non-public company decided not to perform additional tests of controls. The auditor most likely concluded that the:
A)additional evidence to support a further reduction in control risk was not cost beneficial.
B)assessed level of inherent risk exceeded the assessed level of control risk.
C)internal control structure was properly designed and justifiably may be relied on.
D)evidence obtainable through tests of controls would not support an increased level of control risk.

Question

Quizplus · Accepted Answer

The auditor likely concluded that the cost of performing additional tests of controls outweighs the benefits of potentially further reducing the assessed level of control risk. This decision is often based on a cost-benefit analysis, where the auditor determines that the additional assurance gained from further testing is not worth the additional time and resources required.

After Obtaining an Understanding of the Entity's Internal Control and Assessing