Audit and Assurance 2025 – 400 Free Practice Questions to Pass the Exam

The correct response is based on the understanding of how auditors manage the timing of their procedures in relation to the assessed risk of material misstatement. When the risk is assessed as low, it typically indicates that the auditor may rely more on the effectiveness of internal controls. However, this does not grant them less flexibility regarding the timing of their audit procedures.

In fact, auditors can adjust the timing of their procedures based on various factors, including materiality thresholds, the nature of the entity's operations, and compliance with regulatory deadlines. Even with a low risk assessment, the timing of procedures can still be influenced by other considerations, allowing for flexibility in the planning and execution of the audit.

Furthermore, the nature of substantive testing does not inherently restrict the auditor's flexibility related to timing, nor does it allow for different rules based on the risk of material misstatement. Understanding that control effectiveness plays a major role in the assessment, it is critical to recognize that the timing of audit procedures can remain flexible regardless of the perceived risk, as long as it meets overarching audit objectives and complies with applicable standards.