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In this discussion, explain why inherent risk is set for audit objectives for segments (classes of...

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Accounting

In this discussion, explain why inherent risk is set for auditobjectives for segments (classes of transactions, balances, andpresentation and disclosure) rather than for the overall audit.

What is the effect on the amount of evidence the auditor mustaccumulate when inherent risk changes from medium to high for anaudit objective?

Provide examples to illustrate your answer.

Answer & Explanation Solved by verified expert
4.2 Ratings (833 Votes)
Inherent risk It is associated with the misleading information related to financial statements It also arises when financial statements are complex Inherent risk cannot be avoided Inherent risk is for the segments instead for the overall audit as misstatements occur in segments By identifying the expectations of misstatement in the segments the auditor is thus able to modify the evidence of audit by    See Answer
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