If tests of controls reveal that controls are sufficiently effective to justify reducing control risk, the auditor is justified in reducing substantive audit tests.

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Quizplus · Accepted Answer

If tests of controls reveal that controls are sufficiently effective, the auditor can rely on them and reduce control risk. This, in turn, may allow the auditor to reduce substantive audit tests as the risk of material misstatement has been reduced. However, the decision to reduce substantive audit tests also depends on other factors, such as the nature of the assertion being tested and the overall audit objective.

If Tests of Controls Reveal That Controls Are Sufficiently Effective