When the auditor concludes that a control is functioning properly when,in fact,it is not,the auditor has committed the
A) risk of underreliance.
B) risk of overreliance.
C) risk of incorrect acceptance.
D) risk of incorrect rejection.

Question

Quizplus · Accepted Answer

When the auditor concludes that a control is functioning properly when, in fact, it is not, the auditor has committed the risk of overreliance. This occurs when an auditor relies too much on the operating effectiveness of internal controls and does not perform enough substantive testing. As a result, the auditor may not identify material misstatements in the financial statements.

When the Auditor Concludes That a Control Is Functioning Properly