QUESTION 10

Which of the following statements is correct?

A. Auditors need to collect more audit evidence if the materiality is 3% of profit before tax rather than 7% of profit before tax.

B. Auditors must perform tests of controls if their initial assessment shows that internal controls seem to be effective.

C. The level of assurance obtained from dollar unit sampling is (1- the risk of incorrect rejection).

D. A new auditor picked up 7 deviations in a sample of 100, where the true sample deviation rate is 12%. This is an example of sampling risk.

E. Lower assessed control risk strategy means both control risk and detection risk are assessed low. As a result, auditors can collect less audit evidence.