[Rski]

What’s it called when an auditor relies on internal controls when they shouldn’t because internal controls are faulty?

[lap]

This is called Beta Risk. Internal control is not effective but the sample shows that there is no weakness in internal control. Thus you assess control risk too low and over rely on internal controls. So you do not perform enough substantive testing.

REG 69,82; BEC 71,73,78; AUD 44,68,74; FAR 69,73,74,79

[Rski]

Thanks a lot! I haven't gotten to auditing yet.

[Author]

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