The risk-based audit approach requires the auditor to:
A) accept management's judgements
B) identify potential causes of the misstatement
C) ignore changes in accounting policies
D) rely on internal valuations for material assets

Question

Quizplus · Accepted Answer

The risk-based audit approach focuses on identifying and assessing the risks of material misstatement in a company's financial statements, including understanding the entity and its environment, along with its internal control. Identifying potential causes of misstatement is a key part of this approach, as it helps auditors to focus their efforts on the areas of highest risk.

The Risk-Based Audit Approach Requires the Auditor To