The process used when developing an audit strategy at the account or assertion level begins with identifying inherent risks at the account or assertion level.The second step is to _______.
A)determine whether an internal control can mitigate the risk factor
B)increase the extent of detailed substantive procedures performed at year-end
C)perform less extensive detailed substantive procedures at interim
D)determine whether insurance can be purchased to eliminate internal controls

Question

Quizplus · Accepted Answer

The second step in developing an audit strategy at the account or assertion level is to determine whether an internal control can mitigate the identified inherent risks. This involves an evaluation of the design and operating effectiveness of the control, as well as any potential limitations or deficiencies in the control. Based on this analysis, the auditor can decide whether to rely on the control to reduce the assessed risk of material misstatement or to perform additional substantive procedures. The other options (B, C, and D) are not the typical second step in developing an audit strategy and are not relevant to mitigating inherent risks.

The Process Used When Developing an Audit Strategy at the Account