For small clients it is often more efficient to adopt the predominantly substantive approach. Which of the following is a reason for this:
A) they may not have adequate resources to implement all appropriate controls.
B) controls may not be effective.
C) the size of the entity may make it inefficient for the auditor to rely on these controls.
D) all of the above.

Question

Quizplus · Accepted Answer

All of the options provided are valid reasons for adopting a predominantly substantive approach for small clients. Small entities may lack the resources to implement comprehensive controls (A), the controls in place may not be effective (B), and the size of the entity may indeed make it inefficient for auditors to rely on controls, making a substantive approach more efficient (C).

For Small Clients It Is Often More Efficient to Adopt