In which of the following situations will auditors typically rely on internal controls over financial reporting?
A)Only as needed to satisfy SOX.
B)Only if the controls are determined to be designed and operating effectively.
C)Only if the clients asks the auditor to test controls.
D)Only if the controls are sufficient to increase control risk to an acceptable level.

Question

Quizplus · Accepted Answer

Auditors will typically rely on internal controls over financial reporting only if the controls are determined to be designed and operating effectively. This is because relying on ineffective controls can increase the risk of material misstatements in the financial statements, which could lead to audit failures or legal implications for the auditor. Therefore, auditors will only rely on internal controls that they believe will provide sufficient assurance over the accuracy and completeness of financial information.

In Which of the Following Situations Will Auditors Typically Rely