According to AU-C 315, Understanding the Entity and its Environment and Assessing the Risks of Material Misstatement, not all controls are relevant to a financial statement audit. Which one of the following would most likely be considered in an audit?

A. Timely reporting and review of quality control results.

B. Maintenance of control over unused checks.

C. Maintenance of statistical production analyses.

D. Marketing analysis of sales generated by advertising projects.

The correct answer is B. Maintenance of control over unused checks.

Explanation:

Risk of material misstatement is the risk that the financial statements contain material misstatements prior to the performance of the audit. The risk comprises two components, described as follows, in the statements:

Inherent risk - Susceptibility of a statement about a type of transaction, accounting balance or other disclosure of information to a misstatement that could be material, either individually or in aggregate with other inaccuracies, before taking into account the possible corresponding controls.

Control risk - Risk that an error that could exist in a statement about a type of transaction, accounting balance or other information relief, and that could be material either individually or in aggregate with other inaccuracies, is not prevented, or detected and corrected in a timely manner, by the entity's internal control system.