When dealing with audit risk,
A) auditors cannot accept any level of risk in performing the audit function.
B) most risks that auditors encounter are relatively easy to measure.
C) the audit risk model is only used for classes of transactions.
D) the audit risk model helps the auditor to decide how much and what types of evidence to accumulate.

Question

Quizplus · Accepted Answer

The audit risk model helps the auditor to decide how much and what types of evidence to accumulate. This allows the auditor to balance the risk of making an incorrect conclusion with the cost of obtaining additional evidence. Option A is incorrect because auditors may accept some level of risk based on the level of materiality and the extent of evidence obtained. Option B is incorrect because there are various types of audit risk that may be difficult to measure accurately. Option C is incorrect because the audit risk model is used to assess the risk of material misstatement in financial statements, and not only for classes of transactions.

When Dealing with Audit Risk