When the auditor has assessed control risk of a particular area at a reduced level, he or she will then:
A) proceed to expand the sample sizes in that area.
B) test the effectiveness of the controls in that area.
C) negotiate with management to determine which controls will be tested in that area.
D) eliminate the need to gather evidence in that area.

Question

Quizplus · Accepted Answer

When the auditor has assessed control risk at a reduced level, they will test the effectiveness of the controls in that area. This is done to gain assurance that the controls are working as intended and that financial statement assertions can be relied upon. Expanding sample sizes may be done if the auditor determines that additional testing is necessary, but the primary focus is on testing the effectiveness of the controls. Negotiating with management to determine which controls will be tested in that area is not appropriate as the auditor should determine the appropriate controls to test. Eliminating the need to gather evidence in that area is not appropriate as the auditor still needs to gather evidence to support their conclusion.

When the Auditor Has Assessed Control Risk of a Particular