Question

how does the choice of a cr assessment affect audit quality

Answer 1

Control risk is the risk of internal controls not working as intended and the risk of material misstatement associated with the non detection of the same. A control risk is ideally assessed through five important factors i.e. control environment, control activities, the organizations perceived risk assessment, information and communication of internal control across the entity and monitoring of the internal controls. If any of the five criteria are missing, then the risk of material misstatement is high. The methods that the auditor chooses to assess the five components of internal control will certainly determine the audit quality. If he notices that the control activities are not working properly he may want to conduct additional procedures to satisfy himself of the transactions carried out. In case he chooses to ignore, then the audit report may not be accurate.