An auditor has accessed client business risk and the risk of material misstatements to the clients financial statements.These are done in order to:
A)apply the audit risk model to determine the appropriate extent of audit evidence.
B)determine the reliance on the company's internal control systems for financial reporting.
C)determine the test of balances to be performed by the audit team.
D)assure the CPA firm that they can perform the audit effectively and efficiently.

Question

Quizplus · Accepted Answer

Assessing client business risk and the risk of material misstatements helps the auditor apply the audit risk model to determine the appropriate extent of audit evidence needed. This allows the auditor to plan the audit effectively and efficiently, ensuring that the audit is conducted in accordance with auditing standards. Choices B and C may be considerations in the audit but are not the primary reason for assessing risk. Choice D is not a reason for assessing risk, it is a separate goal of the audit firm.

An Auditor Has Accessed Client Business Risk and the Risk