Based on audit evidence gathered and evaluated, an auditor decides to increase the assessed level of control risk from that originally planned. To achieve an overall audit risk level that is substantially the same as the planned audit risk level, the auditor would:
A)decrease substantive testing.
B)decrease detection risk.
C)increase inherent risk.
D)increase materiality levels.

Question

Quizplus · Accepted Answer

If the assessed level of control risk is increased, it means that the auditor is less confident in the effectiveness of the client's internal controls. To maintain the planned level of audit risk, the auditor must decrease detection risk, which is the risk that the auditor will not detect a material misstatement in the financial statements. This means that the auditor will need to perform more substantive testing to obtain the necessary assurance. Therefore, the answer is B – decrease detection risk. The other choices – decreasing substantive testing, increasing inherent risk, and increasing materiality levels – would not be appropriate responses to an increase in the assessed level of control risk.

Based on Audit Evidence Gathered and Evaluated, an Auditor Decides