If an auditor has determined that the client has an excellent internal control structure:
A) business risk is significantly reduced.
B) the type of evidence required changes, but not the quantity.
C) the amount of audit evidence to be collected might be reduced relative to a situation where the control structure is not adequate.
D) the auditor can conclude that there is reasonable assurance that the financial statements do not contain material misstatements.

Question

Quizplus · Accepted Answer

When an auditor assesses a client's internal control structure as excellent, it implies that the control environment effectively mitigates the risk of material misstatements. Consequently, the auditor may decide that less audit evidence is needed compared to a scenario where the internal controls are deemed inadequate, as the risk of error or fraud is lower.

If an Auditor Has Determined That the Client Has an Excellent