Which of the following is a step in an auditor's decision to assess control risk at below the maximum?
A)Apply analytical procedures to both financial data and nonfinancial information to detect conditions that may indicate weak controls.
B)Perform tests of details of transactions and account balances to identify potential errors and fraud.
C)Identify specific internal control policies and activities that are likely to detect or prevent material misstatements.
D)Document that the additional audit effort to perform tests of controls exceeds the potential reduction in substantive testing.

Question

Quizplus · Accepted Answer

To assess control risk at below the maximum, the auditor must identify specific internal control policies and activities that are likely to detect or prevent material misstatements. This step is crucial in understanding the effectiveness of the internal controls and to determine if they can be relied on to reduce the risk of material misstatements. The other choices are related to the audit process but do not specifically address the decision to assess control risk at below the maximum.

Which of the Following Is a Step in an Auditor's