When an auditor is investigating the inherent risk associated with stock issuances/sales that are recorded in the wrong period,the auditor is most likely assessing the risks of material misstatements associated with the existence assertion.

Question

Quizplus · Accepted Answer

The existence assertion is relevant when the auditor is concerned about whether the recorded transactions actually occurred. In this case, the inherent risk associated with stock issuances/sales recorded in the wrong period suggests that there may be a risk that certain transactions were not actually valid and did not occur in the period recorded. Therefore, the auditor is likely assessing the risks of material misstatements associated with the existence assertion.

When an Auditor Is Investigating the Inherent Risk Associated with Stock