Which of the following affects audit effectiveness?
Correct answer: D. Both A. and C.
- A. Risk of over reliance
- B. Risk of incorrect rejection
- C. Risk of incorrect acceptance
- D. Both A. and C.
Explanation
Overreliance on controls and incorrect acceptance can cause the auditor to miss a material misstatement, so both threaten audit effectiveness. Incorrect rejection mainly affects audit efficiency because it leads to unnecessary additional work.
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About Auditing
Auditing examines accounting records and financial statements to determine whether they present a reliable and fairly stated position. The subject covers audit objectives, internal controls, audit evidence, materiality, vouching, verification, working papers, auditor independence, audit reports, and the distinction between an audit and accounting or investigation.
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