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 an interim time period
C)increase the extent of substantive testing
D)keep the risk of misstatement to an acceptable low level

Question

Quizplus · Accepted Answer

When the risk of material misstatement is higher, the auditor needs to increase the extent of substantive testing, which includes performing more tests and gathering more evidence to reduce the level of risk to an acceptable level. Choosing option A (gathering more reliable evidence of fraud) is not appropriate because the presence of fraud is not assumed just because the risk of misstatement is high. Option B (performing substantive tests at an interim time period) is also not an automatic response to a high level of risk; it may or may not be necessary depending on the circumstances. Option D (keeping the risk of misstatement to an acceptable low level) is vague and does not explain how to achieve that goal. Therefore, option C is the best choice.

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