When internal controls are not effective, then substantive audit tests are less reliable; thus, the extent of substantive tests should be increased.

Question

Quizplus · Accepted Answer

When internal controls are not effective, there is an increased risk of material misstatement in the financial statements. Substantive audit tests are less reliable in detecting these material misstatements. Therefore, the auditor must increase the extent of substantive tests to obtain sufficient evidence to support their opinion.

When Internal Controls Are Not Effective, Then Substantive Audit Tests