Here's something to ruin my day… Haha. I just went to work questions and this was my first one.
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Which of the following statements is correct concerning an auditor's assessment of control risk?
A. Assessing control risk may be performed concurrently during an audit with obtaining an understanding of the entity's internal control.
B. Evidence about the operation of control activities in prior audits may not be considered during the current year's assessment of control risk.
C. The basis for an auditor's conclusions about the assessed level of control need not be documented unless control risk is assessed at the maximum level.
D. The lower the assessed level of control risk, the less assurance the evidence must provide that the control activities are operating effectively.
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The correct answer is A.
The auditor may obtain audit evidence about the effectiveness of both the design and operation of control activities that supports a lower assessed level of control risk for some assertions. Such audit evidence may be obtained from tests of controls planned and performed concurrently with obtaining the understanding or from procedures performed to obtain the understanding that were not specifically planned as tests of controls.
Although some risk assessment procedures that the auditor performs to evaluate the design of controls and to determine that they have been implemented may not have been specifically designed as tests of controls, they may nevertheless provide audit evidence about the operating effectiveness of the controls and, consequently, serve as tests of controls.
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So what's the deal with D? I know that a lot of the times with AUD questions you must look for the “most correct” and I originally picked A but then changed my mind to D based on what I thought I understood from this conversation. I'm going to post this in the study group for hopefully more insight.