A PA recently finished the audit of a family-owned business.Now she is working on a large client with about 50 times the assets and 30 times total revenue.For the larger client,the PA will likely have
A)no changes to the audit risk model.
B)higher control risk.
C)higher acceptable audit risk.
D)lower acceptable audit risk.

Question

Quizplus · Accepted Answer

The size of the client, in terms of assets and revenue, will likely result in a lower acceptable audit risk for the larger client. This is because the potential impact of material misstatements on the financial statements is much greater for a larger client. As a result, the auditor will need to perform more extensive procedures to obtain a higher level of assurance regarding the financial statements, resulting in a lower acceptable audit risk. Control risk may or may not be higher depending on the client's internal controls, so choice B is not necessarily true. There is also not enough information to determine if there will be changes to the audit risk model, so choice A is not the best answer.

A PA Recently Finished the Audit of a Family-Owned Business