In obtaining evidence concerning the cash balance, the auditor performs the following procedures: Obtain bank statements directly from bank, prepare bank reconciliation, and verify all reconciling items. In this case, it is most likely that:
A) detection risk is set at moderate to high.
B) detection risk is set at low to very low.
C) inherent risk is set at low.
D) control risk is set at moderate to low.
E) detection risk is set at minimum to moderate.

Question

Quizplus · Accepted Answer

By obtaining bank statements directly from the bank, preparing bank reconciliations, and verifying all reconciling items, the auditor is performing thorough procedures to verify the cash balance. This indicates that the auditor is aiming to minimize detection risk, hence setting it at low to very low.

In Obtaining Evidence Concerning the Cash Balance, the Auditor Performs