If the auditor finds a misstatement when performing substantive tests, _______.
A)the auditor should immediately withdraw from the engagement
B)the auditor needs to evaluate the materiality of the misstatement
C)the auditor should immediately increase inherent risk related to the engagement
D)the auditor should immediately decrease inherent risk related to the engagement

Question

Quizplus · Accepted Answer

When the auditor finds a misstatement during substantive tests, the auditor needs to evaluate the materiality of the misstatement. If the misstatement is material, the auditor should consider the implications for the audit report. If the misstatement is immaterial, the auditor can evaluate whether any adjustments need to be made to the financial statements or whether any additional work needs to be done to address the cause of the misstatement. The auditor does not need to immediately withdraw from the engagement or adjust inherent risk related to the engagement based on finding a misstatement during substantive tests.

If the Auditor Finds a Misstatement When Performing Substantive Tests