Question

Which of the following statements is false as it relates to the auditor's responsibility to document the risk assessment?

A) The documentation may include the use of questionnaires.
B) Management's response to high-risk areas identified by the auditor should be included in the documentation.
C) The level of risk must be set quantitatively (i.e., inherent risk is 60%).
D) All of the above are false.

Answer 1

The false statement is option C: The level of risk must be set quantitatively.

Step-by-step explanation:

The false statement as it relates to the auditor's responsibility to document the risk assessment is option C) The level of risk must be set quantitatively (i.e., inherent risk is 60%).

Risk assessment involves both qualitative and quantitative methods. While questionnaires (option A) can be used for qualitative risk assessment, quantitative risk assessment involves assigning numerical values to risks. However, risk levels are not required to be set quantitatively as stated in option C.

Management's response to high-risk areas (option B) should be included in the documentation, providing insights into how management plans to address the identified risks.