When management has an adequate level of integrity for the auditor to accept the engagement but cannot be regarded as completely honest in all dealings, auditors normally:

Question

Quizplus · Accepted Answer

When management's level of integrity is not completely honest in all dealings, the auditor needs to be more cautious and reduce acceptable audit risk to ensure sufficient audit evidence is obtained. However, inherently risky areas may still exist, so the auditor may need to increase inherent risk. Therefore, the best choice is to reduce acceptable audit risk and increase inherent risk, which is option B.

When Management Has an Adequate Level of Integrity for the Auditor