Substantive tests of balances are sometimes done before the year- end. This can only be done if:
A) internal controls are effective.
B) substantive tests have to be increased.
C) more reliable evidence is needed.
D) none of the above.

Question

Quizplus · Accepted Answer

Substantive tests of balances can be performed before year-end if internal controls are effective. This is because the reliance on internal controls provides evidence about the accuracy and completeness of the financial information. If internal controls are effective, the auditor can assess the risk of material misstatement as low, and may perform substantive procedures earlier in the audit.

Substantive Tests of Balances Are Sometimes Done Before the Year-