Why is the auditor more concerned with the risk of overreliance rather than the risk of underreliance?
A) The risk of underreliance is not a type of sampling risk.
B) The risk of overreliance exposes the auditor to an efficiency loss.
C) The risk of overreliance may result in the auditor's failing to perform sufficient substantive procedures.
D) The risk of overreliance cannot be controlled by the auditor during the sampling process.

Question

Quizplus · Accepted Answer

The risk of overreliance, also known as the risk of incorrect acceptance, refers to the risk of the auditor relying too heavily on the results of the audit sample and failing to detect a material misstatement. This risk is a concern because it may result in the auditor's failing to perform sufficient substantive procedures, which may lead to a material misstatement going undetected. In contrast, the risk of underreliance, also known as the risk of incorrect rejection, refers to the risk of the auditor concluding that a material misstatement exists when, in fact, it does not. This risk is less of a concern because it is easier for the auditor to address by performing additional procedures.

Why Is the Auditor More Concerned with the Risk of Overreliance