If an auditor performs a test of controls and determines that internal controls

Question

If an auditor performs a test of controls and determines that internal controls relevant to cash disbursements are in place and operating effectively, which of the following best describes the auditors risk assessment?

a.        Set control risk at maximum and increase the level of detection risk.

b.       Reduce control risk and increase inherent risk.

c.        Set control risk at a maximum and decrease the level of detection risk.

d.       Reduce control risk and increase the level of detection risk.

Explanation / Answer

a.        Set control risk at maximum and increase the level of detection risk.

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