When there is the potential for material misstatements from purchase adjustments transactions, _______.
A)the auditor should obtain an understanding of all immaterial aspects of the internal control structure components and consider the factors that affect the risk of such misstatements
B)the auditor should obtain an understanding of all relevant aspects of the internal control structure components and consider the factors that affect the risk of such misstatements
C)the auditor should obtain an understanding of all relevant aspects of the client legal counsel's internal control structure components and consider the factors that affect the risk of such misstatements
D)the auditor should obtain an understanding of all relevant aspects of the external control structure components and consider the factors that affect the risk of such misstatements

Question

Quizplus · Accepted Answer

When there is the potential for material misstatements from purchase adjustments transactions, the auditor should obtain an understanding of all relevant aspects of the internal control structure components and consider the factors that affect the risk of such misstatements. In order to assess the risk of material misstatement, the auditor needs to consider both the inherent risk in the transaction and the effectiveness of the client's internal controls in recognizing and preventing misstatements. Therefore, understanding all relevant aspects of the internal control structure components is necessary.

When There Is the Potential for Material Misstatements from Purchase