Which of the following is True regarding audit risk for segments?
A)Control risk must be assessed at the same level for all accounts.
B)Factors affecting inherent risk do not differ from account to account.
C)Acceptable audit risk is ordinarily assessed by the auditor during the substantive test of balances phase and is held constant for each major cycle and account.
D)In some cases,a lower acceptable audit risk may be more appropriate for one account than for others.

Question

Quizplus · Accepted Answer

In some cases, a lower acceptable audit risk may be more appropriate for one account than for others. This is because the level of inherent risk and control risk can vary between accounts and can impact the overall audit risk. The auditor should consider these factors when determining the appropriate level of acceptable audit risk for each account or segment. A and B are incorrect because control risk and inherent risk can vary from account to account, and therefore must be assessed separately. C is incorrect because acceptable audit risk should be determined during the planning phase of the audit, not the substantive test of balances phase.

Which of the Following Is True Regarding Audit Risk for Segments