When an Auditor Increases the Assessed Level of Risk of Material

question 18

Multiple Choice

When an auditor increases the assessed level of risk of material misstatement because certain control procedures were determined to be ineffective,the auditor would most likely increase the

• A) Extent of tests of controls.
• B) Level of detection risk.
• C) Extent of substantive tests.
• D) Level of inherent risk.

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Definitions:

Cumulative Relative Frequency

The accumulation of the previous relative frequencies up to a certain class or point, showing the proportion of observations below a particular value in a dataset.

Dispersion

A measure of the spread of a distribution or the variability of data points around a central value.

Standard Deviation

A statistic that measures the dispersion of a dataset relative to its mean, indicating how spread out the data points are.

Percentile

A measure used in statistics to indicate the value below which a given percentage of observations in a group of observations falls.