What are the three adjustments an auditor should make to respond to risks at the assertion level?

The correct answer identifies the three key adjustments an auditor must make in response to identified risks at the assertion level: nature, extent, and timing.

Understanding these terms is crucial for auditors in the planning and execution of an audit.

• Nature refers to the type of audit procedures that will be performed, which can vary depending on the risks identified. For example, if there is a high risk of material misstatement in revenue recognition, the auditor may choose to perform substantive testing of transactions related to revenue.

• Extent involves the quantity of audit procedures that will be applied. This may relate to how many items will be tested or the volume of transactions reviewed. If higher risks are identified, an auditor might decide to increase the extent of testing to obtain enough evidence to support their opinion.

• Timing pertains to when the audit procedures will be performed. This could mean adjusting the timing of procedures to perform tests at different periods, which could potentially provide better evidence regarding the accuracy of management’s assertions.

These three adjustments allow auditors to tailor their audit approach to address specific risks effectively, ensuring that they gather sufficient and appropriate audit evidence to form their opinion on the financial statements.

The other options do not accurately reflect the appropriate adjustments that auditors can