In testing controls,an overreliance on internal controls that reduces substantive tests and increases the likelihood of not detecting a material misstatement occurs because:
A)Deviation in the population was less than the sample.
B) true deviation in the population was greater than the sample.
C) auditor judgment was flawed.
D) it is inherent in the audit risk model.

Question

Quizplus · Accepted Answer

Overreliance on internal controls can lead to an increased risk of not detecting material misstatements if the true deviation in the population is greater than what was observed in the sample. This means that substantive testing should be conducted to ensure the accuracy of the financial statements. Deviations that are less than the sample or flawed auditor judgment do not necessarily lead to an increased risk of not detecting material misstatements. It is inherent in the audit risk model to consider both controls and substantive tests to address the risk of material misstatements.

In Testing Controls,an Overreliance on Internal Controls That Reduces Substantive