The auditor designs the risk assessment procedures that he believes will be effective in assessing the risk of material misstatement for the entity.According to the auditing standards,the risk assessment process should include
A)inquiries of management about the risk of material misstatement due to errors or fraud
B)tests of controls
C)observation of inventory
D)substantive test of transactions

Question

Quizplus · Accepted Answer

According to auditing standards, the risk assessment process should include inquiries of management about the risk of material misstatement due to errors or fraud. Testing of controls, observation of inventory, and substantive tests of transactions are additional procedures that may be performed in response to assessed risks, but they are not required components of the risk assessment process.

The Auditor Designs the Risk Assessment Procedures That He Believes