An auditor has accessed client business risk and the risk to material misstatements to the clients financial statements. These are done in order to:
A) apply the audit risk model in determining the appropriate audit procedures to perform.
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 risk of material misstatements are important steps in determining the level of audit risk and the appropriate audit procedures to perform. The audit risk model takes into account these risks, along with detection risk, to determine the overall level of risk and the necessary audit procedures to mitigate that risk. The other options may also be factors in the audit process, but are not the primary reason for assessing business risk and risk of material misstatements.

An Auditor Has Accessed Client Business Risk and the Risk