In the substantive approach, if there is an internal control in place, the auditors may _______.
A)test the effectiveness of the internal control
B)issue a qualified opinion
C)assess all procedures in the audit as having high audit risk
D)withdraw from the audit

Question

Quizplus · Accepted Answer

In the substantive approach, auditors may test the effectiveness of the internal control if it is in place. This is done to gain assurance that the controls are functioning as intended and to determine the extent to which reliance can be placed on them for the audit. Therefore, choice A is the best answer. Choice B is incorrect because issuing a qualified opinion is not necessarily based on the presence or absence of internal controls. Choice C is incorrect as evaluating audit risk is a separate concept from testing internal controls. Choice D is incorrect as withdrawal from the audit is a serious action that should be taken only in extreme circumstances, and the presence of internal controls is not a sufficient reason for withdrawal.

In the Substantive Approach, If There Is an Internal Control