If an auditor concludes that internal controls are likely to be effective, the preliminary assessment of control risk can be reduced, leading to which of the following impacts on the acceptable risk of incorrect acceptance?
A) The acceptable risk of incorrect acceptance will be reduced.
B) The acceptable risk of incorrect acceptance will be increased.
C) The acceptable risk of incorrect acceptance will be eliminated.
D) The acceptable risk of incorrect acceptance will not be impacted.

Question

Quizplus · Accepted Answer

When an auditor assesses internal controls as likely to be effective, they may rely more on these controls and thus accept a higher risk of incorrect acceptance, as they believe the controls reduce the likelihood of material misstatements going undetected.

If an Auditor Concludes That Internal Controls Are Likely to Be