Inventory is the most valuable asset for a company. The company applies controls over inventory for its safeguard and detection of inventory frauds. The auditor also tests these controls to determine the nature and extent of the audit procedures applied for audit of inventories. Audit risk is a risk that audit may provide an inappropriate opinion on the basis of his findings during the audit. There are some inherent risks and avoidable risk which result in an audit risk. To choose: The action of the auditor if the control risk is high.

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Chapter 14, Problem 14.13MCQ

To determine

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Inventory is the most valuable asset for a company. The company applies controls over inventory for its safeguard and detection of inventory frauds. The auditor also tests these controls to determine the nature and extent of the audit procedures applied for audit of inventories.

Audit risk is a risk that audit may provide an inappropriate opinion on the basis of his findings during the audit. There are some inherent risks and avoidable risk which result in an audit risk.

To choose: The action of the auditor if the control risk is high.

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