The risk of underreliance is the risk that the sample selected to test controls
A) does not support the auditor's planned level of control risk when the true operating effectiveness of the control justifies such an assessment.
B) contains misstatements that could be material to the financial statements when aggregated with misstatements in other account balances or transaction classes.
C) contains proportionally fewer monetary errors or deviations from prescribed control procedures than exist in the balance or class as a whole.
D) does not support the tolerable misstatement for some or all of management's assertions.

Question

Quizplus · Accepted Answer

Underreliance risk refers to the risk of assessing control risk lower than what should have been assigned based on the true operating effectiveness of the control. This can happen when the sample size selected to test controls is not sufficient or does not contain enough exceptions to support the planned level of control risk. In other words, the sample selected does not support the auditor's planned level of control risk when the true operating effectiveness of the control justifies such an assessment. Option A correctly describes this risk. Options B, C, and D are unrelated risks. Option B describes the risk of sampling error, option C describes the risk of overreliance, and option D describes the risk of incorrect materiality assessment.

The Risk of Underreliance Is the Risk That the Sample