I got this MCQ from WTB. I understand how are the 3 incorrect answers as wrong. But I could not understand how the right answer as correct.
Could someone explain it a little better please? Thanks!
Before applying substantive procedures to the details of asset accounts at an interim date, an auditor should assess:
*The difficulty in controlling the incremental audit risk.
This answer is correct because professional standards require that an auditor assess the difficulty in controlling the incremental audit risk. In addition, the auditor should consider the cost of the substantive tests that are necessary to appropriately examine the remaining period.
1. Inherent risk at the maximum level > This answer is incorrect because while inherent risk may be at the maximum level, the situation in which it is not is more likely, since a lower level of risk is more likely to lead to interim testing.
2. Materiality for the accounts tested as insignificant >This answer is incorrect because the accounts tested need not be insignificant.
3. Control risk at below the maximum level > This answer is incorrect because while control risk (or risk of material misstatement) will generally be assessed at below the maximum level in such circumstances, this is not required.
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