Which one of the following discoveries by the auditor would NOT raise the red flag of increased inherent risk?

Question

Quizplus · Accepted Answer

The fact that the firm has audited the client for four consecutive years does not indicate any increase in inherent risk. In fact, it may suggest a lower inherent risk as the auditor has established a familiarity with the client's operations and controls. The other options all point towards potential areas of increased inherent risk: A) Significant misstatements in accounts payable indicate a lack of effective internal controls and the potential for material misstatements in financial statements. C) Holding extensive inventory may lead to a higher risk of obsolescence or impairment. D) Having a subsidiary may increase the complexity of the financial reporting, leading to a higher risk of errors or misstatements.

Which One of the Following Discoveries by the Auditor Would