Question

AU-C 330 Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained and AS 2301 The Auditor's Responses to the Risks of Material Misstatement provide which of the following examples of responding to risk at the financial statement level?

1) Emphasize that audit team members should not attempt to maintain professional skepticism
2) Assign less experienced staff to areas of higher risk of material misstatement
3) Provide less supervision
4) Include more elements of unpredictability in the selection of audit procedures

Answer 1

AU-C 330 and AS 2301 provide examples of responding to risk at the financial statement level.

Step-by-step explanation:

AU-C 330 Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained and AS 2301 The Auditor's Responses to the Risks of Material Misstatement provide examples of responding to risk at the financial statement level.

A correct example of responding to risk at the financial statement level is 4) Include more elements of unpredictability in the selection of audit procedures. By incorporating elements of unpredictability, the auditor can minimize the risk of overlooking material misstatements that could impact the financial statements.

In contrast, options 1) Emphasize that audit team members should not attempt to maintain professional skepticism, 2) Assign less experienced staff to areas of higher risk of material misstatement, and 3) Provide less supervision, are incorrect responses as they go against the fundamental principles of auditing and do not effectively address the risks at the financial statement level.