An important role of inherent risk assessment during the audit process is the need to
A)document the quality of the disaster recovery plan.
B)attempt to predict where misstatements are most and least likely in the financial statement segments.
C)train the audit staff to assess the integrity of management.
D)increase the level of analytical review.

Question

Quizplus · Accepted Answer

Inherent risk assessment is a crucial step in the audit process that involves identifying and assessing the risk of material misstatements in the financial statements. By attempting to predict where misstatements are most and least likely, the auditor can focus their attention and resources on areas that are deemed to be high-risk. This helps ensure that the audit is efficient and effective in identifying and addressing potential errors or fraud in the financial statements. The other options listed are not related to inherent risk assessment.

An Important Role of Inherent Risk Assessment During the Audit