Risk Responses When considering risk responses, what steps should the auditor take?
An auditor should do the following when considering risk responses:
1 . Evaluate the reasons for the assessed risk of material misstatement.
2 . Estimate the likelihood of material misstatement due to the inherent risks of the client.
3 . Consider the role of internal controls, and determine whether control risk is relatively high or low, thereby determining whether the auditor should rely on controls (thereby necessitating tests of controls) or whether the auditor needs to conduct a more substantive audit.
4 . Obtain more relevant and reliable audit evidence as the auditor's assessment of the risk of material misstatement increases.
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