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 the fact 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. Option A is a step to detect weak controls, but it does not help the auditor to assess control risk at below the maximum. Option B is a step in the substantive testing phase, which may be performed if the auditor assesses control risk at the maximum. Option D is a consideration for determining the extent of testing and does not help the auditor to assess control risk at below the maximum.

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