When the results of substantive procedures identify misstatements, _______.
A)the auditors refer the misstatements to the prior auditor for correction
B)auditors consider whether the misstatements may be indicative of the need to re-evaluate inherent risk, control risk or fraud risk
C)auditors consider whether the misstatements may be indicative of the need to re-evaluate inherent risk only
D)auditors consider whether the misstatements may be indicative of the need to re-evaluate control risk only

Question

Quizplus · Accepted Answer

When misstatements are identified during substantive procedures, auditors must consider if it indicates the need to re-evaluate inherent risk, control risk or fraud risk. They need to reassess the risks of material misstatement accordingly and make any necessary adjustments to their audit approach. Referring the misstatements to the prior auditor for correction is not an appropriate response to identified misstatements.

When the Results of Substantive Procedures Identify Misstatements, _______