When might an auditor decide NOT to reduce assessed control risk even if internal controls are adequate?
A) The cost of the study and tests of controls will exceed the savings from reduced substantive procedures.
B) A qualified opinion will be issued.
C) The auditor plans to rely on the controls and reduce substantive testing.
D) all of the above

Question

Quizplus · Accepted Answer

The cost of the study and tests of controls may exceed the savings from reducing substantive procedures. This means that it may not be cost-effective for the auditor to invest in assessing controls, and they may choose to rely on substantive testing instead. In this scenario, although the internal controls are adequate, the auditor may choose not to reduce the assessed control risk. Options B and C are incorrect as they do not provide a sufficient reason not to reduce the assessed control risk.

When Might an Auditor Decide NOT to Reduce Assessed Control