If an auditor believes the chance of financial failure is high and there is a corresponding increase in business risk for the auditor, acceptable audit risk would likely
A) be reduced.
B) be increased.
C) remain the same.
D) be calculated using a computerized statistical package.

Question

Quizplus · Accepted Answer

When an auditor believes that the chance of financial failure is high, there is an increase in business risk for the auditor as well. In order to mitigate this risk, the acceptable audit risk should be reduced. This means that the auditor will need to conduct a more thorough and extensive audit to ensure that any potential errors or irregularities are detected and addressed.

If an Auditor Believes the Chance of Financial Failure Is