Describe the Three Possible Levels at Which the Auditor Might

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The Answer is a. Control risk is maximum: The auditor will not use evidence about internal control to reduce audit risk; therefore, detection risk must be reduced using very extensive substantive tests. However, the auditor will still need to gain sufficient knowledge of internal control to evaluate the design effectiveness of the control system.
b. Control risk is slightly reduced from maximum: Results from tests of control suggest the appropriateness of placing some reliance on controls. Although detection risk is allowed to rise slightly, extensive substantive tests will still be performed.
c. Control risk is reduced to a moderate or low level: The auditor will rely heavily on the quality of internal control to reduce audit risk and perform minimal substantive tests to reduce detection risk.

Describe the Three Possible Levels at Which the Auditor Might

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Describe the Three Possible Levels at Which the Auditor Might

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