When the auditor has the same level of willingness to risk that material errors will exist after the audit is finished for all five cycles,
A)the same amount of evidence will be gathered for each cycle.
B)a different extent of evidence is needed for various cycles.
C)he/she has not followed generally accepted auditing standards.
D)the level for each cycle must be no more than 2% so that the entire audit does not exceed 10%.

Question

Quizplus · Accepted Answer

Generally accepted auditing standards require the auditor to assess the risks of material misstatement in each cycle and to obtain sufficient and appropriate audit evidence to reduce the risk of material misstatement to an acceptably low level. The level of risk may vary from one cycle to another based on various factors such as the complexity of the transaction cycle, the effectiveness of the internal control system, and the results of the auditor's risk assessment procedures. Therefore, the auditor may need to gather a different extent of evidence for each cycle to reach a conclusion on the fairness of the financial statements. Maintaining the same level of risk for all cycles may not be feasible or appropriate in practice.

When the Auditor Has the Same Level of Willingness to Risk