The extent of tests of details of balances can be reduced when transaction-related audit objectives have been satisfied by tests of controls or substantive tests of transactions.

Question

Quizplus · Accepted Answer

When transaction-related audit objectives have been satisfied by tests of controls or substantive tests of transactions, the risk of material misstatement in balances is reduced. Therefore, the extent of tests of details of balances can be reduced. This is in line with the principle of "relying on controls" and helps to optimize the efficiency and effectiveness of the audit.

The Extent of Tests of Details of Balances Can Be