Comprehensive and Detailed Step-by-Step Explanation:
* Reference to Engagement Risk Assessment:
* Definition: Engagement risk assessment evaluates specific risks relevant to the engagement and identifies controls or mitigations.
* Standard 2210.A1: Internal auditors must consider significant risks to objectives, focusing on their likelihood and impact.
* Reasoning:
* Option Cis correct because it aligns with assessing significant risks and ensuring they are mitigated to acceptable levels.
* Option A(ensuring all risks are addressed) is impractical since auditors prioritize significant risks within resource constraints.
* Option Bfocuses on prioritizing risks but does not encompass the broader purpose of addressing their impact or mitigation.
* Importance of Risk Assessment:
* It ensures that the audit focuses on high-impact risks, aligning resources with the organization's risk management framework.