Assume an audit client identified in the planning stage of the audit the risk of material misstatement for revenue recognition and accounts receivable due to complex valuation related issues; this situation warrants the auditor to accumulate additional audit evidence and to assign more experienced staff to perform the testing in this area.

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This is a true statement. When a risk of material misstatement is identified, auditors must design and perform additional audit procedures to obtain sufficient and appropriate evidence to decrease the risk of material misstatement. In this case, assigning more experienced staff to perform testing in the area of revenue recognition and accounts receivable due to the complexity of the valuation-related issues is a suitable step towards reducing the risk of material misstatement.

Assume an Audit Client Identified in the Planning Stage of the Audit