When controls are effectively designed, the auditor assesses control risk:
A) At a level that does not reflect the effectiveness of those controls.
B) at a level that reflects the effectiveness of those controls.
C) at a reduced level, as the controls are effective.
D) all of the above

Question

Quizplus · Accepted Answer

When controls are effectively designed, the auditor should assess control risk at a level that reflects the effectiveness of those controls. Assessing control risk at a level that does not reflect the effectiveness of those controls (option A) would lead to an overreliance or underreliance on controls, ultimately affecting the overall audit risk. Similarly, reducing control risk (option C) without sufficient basis could also lead to an overreliance on controls. Therefore, option B is the best choice as it aligns with the concept of assessing control risk based on the effectiveness of controls. Option D is incorrect as option A and C are contradictory and cannot be true together.

When Controls Are Effectively Designed, the Auditor Assesses Control Risk