The higher the risk of material misstatement,the more likely the auditor is to
A)gather more relevant and reliable evidence of fraud
B)perform substantive tests at or near year end
C)increase the extent of control testing
D)keep the risk of misstatement to an acceptable low level

Question

Quizplus · Accepted Answer

When there is a higher risk of material misstatement, the auditor is more likely to perform substantive tests at or near year end. This is because year-end balances tend to be more susceptible to material misstatements, and performing tests closer to year-end can help ensure that the financial statements are fairly presented. The auditor may also gather more relevant and reliable evidence of fraud, and may need to increase the extent of control testing, but performing substantive tests at or near year-end is the best choice. The auditor's goal is to keep the risk of misstatement to an acceptable low level, but this is not a specific action they would take in response to a higher risk of material misstatement.

The Higher the Risk of Material Misstatement,the More Likely the Auditor