When assessing risk, it is important to remember that
A) for acceptable audit risk, the SEC decides the risk the CPA firm should take for public clients.
B) inherent risk can be changed by the auditor.
C) detection risk can only be determined after audit risk, inherent risk, and control risk are determined.
D) control risk is determined by company management since they are responsible for internal control.

Question

Quizplus · Accepted Answer

Detection risk is the only element of audit risk that can be controlled by the auditor. Inherent risk is determined by the nature of the transaction or account being audited and cannot be changed. Control risk, while influenced by management, is ultimately assessed by the auditor based on their evaluation of the effectiveness of the company's internal controls. The SEC does not determine acceptable audit risk for CPA firms.

When Assessing Risk, It Is Important to Remember That