Auditors are willing to accept a higher risk that their audit procedures may not detect a material misstatement ________.
A)when detection risk is high
B)when control risk is high
C)when detection risk is low
D)when control risk is low

Question

Quizplus · Accepted Answer

When detection risk is high (meaning that the risk of the auditor's procedures failing to detect a material misstatement is high), auditors may accept a higher risk, as they may not be able to completely mitigate the risk of misstatement. This is balanced by reducing control risk (the risk of a material misstatement occurring in the first place) through assessing and testing the client's internal controls. Therefore, auditors may accept a higher level of detection risk when control risk is low, but not necessarily when it is high.

Auditors Are Willing to Accept a Higher Risk That Their