Question

The ultimate purpose of assessing control risk is to contribute to the auditor's evaluation of the:

1) Risk that material misstatements exist in the financial statements.
2) Factors that raise doubts about the auditability of the financial statements.
3) Possibility that the nature and extent of substantive tests may be reduced.
4) Operating effectiveness of internal control policies and procedures.

Answer 1

The purpose of assessing control risk is to evaluate the risk of material misstatements in financial statements and determine the operating effectiveness of internal control policies and procedures.

Step-by-step explanation:

The ultimate purpose of assessing control risk is to contribute to the auditor's evaluation of the:

1. Risk that material misstatements exist in the financial statements.
2. Factors that raise doubts about the auditability of the financial statements.
3. Possibility that the nature and extent of substantive tests may be reduced.
4. Operating effectiveness of internal control policies and procedures.

When assessing control risk, auditors aim to determine the risk that material misstatements exist in the financial statements. This involves understanding and evaluating the effectiveness of internal control policies and procedures. It helps auditors decide the nature and extent of substantive tests, as well as identify any factors that may raise doubts about the auditability of the financial statements.