Use the audit risk model as a framework to explain the following independent situations and to decide if the auditor’s conclusion is appropriate.
Jan Morris, CPA, is finishing an audit of Night Time Manufacturing and completed an extensive evaluation of internal controls. She thinks that control risk must be zero, since she has performed so many dual-purpose tests. Is she justified in her belief?
Upton Jordan, CPA, has participated in the audit of Bassetts, Inc. for six years – three years as a staff accountant and two years as a senior accountant. If this year’s audit is the same as the rest, no accounting adjustments will be recommended. Is he justified in his belief that inherent risk is zero?