An auditor who audits a business cycle that has low inherent risk should:
A)increase the amount of audit evidence gathered.
B)assign more experienced staff to that area.
C)increase the performance materiality level for the area.
D)expand planning procedures.

Question

Quizplus · Accepted Answer

When inherent risk is low, the auditor may assign a higher materiality level to the area, as the risk of material misstatement is lower. This means that the auditor may accept a higher probability of misstatements going undetected. Therefore, increasing the performance materiality level for the area would be appropriate. Increasing audit evidence gathered, assigning more experienced staff, or expanding planning procedures may be appropriate in areas with higher levels of inherent risk.

An Auditor Who Audits a Business Cycle That Has Low