Question

The objective of the auditor is to identify and assess the risks of material misstatement (RMMs). The auditor therefore identifies and assesses RMMs
A. At the financial statement and relevant assertion levels.
B. During initial audit planning only at the financial statement level.
C. For each assertion after considering the effects of internal control.
D. For assertions that are probable of being materially misstated.

Answer 1

The auditor generally identifies and assesses RMMs "at the financial statement and relevant assertion levels."

This is because the main reason for carrying out the risk assessment is to create a defining motive for designing and performing further audit procedures.

Thus, at the financial statement and relevant assertion levels, the auditor would have known that the information being used was accurate.

This is because the financial statement and relevant assertions are considered as management's statements that the financial statements used are accurate.

Hence, in this case, it is concluded that the correct answer is option A. "at the financial statement and relevant assertion levels."