While performing a substantive test of details during an audit, the auditor determined that the sample results supported the conclusion that the recorded account balance was materially misstated. It was, in fact, not materially misstated. Such a situation illustrates the risk of
A) Incorrect rejection.
B) Incorrect acceptance.
C) Assessing control risk too high.
D) Assessing control risk too low.

Question

Quizplus · Accepted Answer

This situation illustrates the risk of incorrect rejection, where the auditor concludes that a balance is materially misstated when it is not, leading to unnecessary audit work.

While Performing a Substantive Test of Details During an Audit