If the auditor decides to assess control risk at the moderate level in a private company audit, when in previous years the auditor set control risk at the maximum level, then tests of controls for the current year would be
A) increased in number.
B) reduced in number.
C) not performed.
D) unchanged from prior planned settings.

Question

Quizplus · Accepted Answer

When an auditor decides to assess control risk at a lower level than previously (in this case, moving from maximum to moderate), it implies that the auditor has gained or expects to gain a higher level of confidence in the effectiveness of the company's internal controls. To justify this lower assessment of control risk, the auditor would need to perform more tests of controls to obtain evidence that the controls are operating effectively.

If the Auditor Decides to Assess Control Risk at the Moderate