After obtaining an understanding of internal controls and assessing control risk on the audit of a non-public company, an auditor decided to perform tests of controls. The auditor most likely decided that:
A)it would be efficient to perform tests of controls that would result in a reduction in planned substantive tests.
B)additional evidence to support a further reduction in control risk is not available.
C)an increase in the assessed level of control risk is justified for certain financial statement assertions.
D)there were many internal control weaknesses that could allow errors to enter the accounting system.

Question

Quizplus · Accepted Answer

After assessing control risk, the auditor has determined that performing tests of controls would be efficient and effective in reducing planned substantive tests. This means that the auditor wants to rely on the effectiveness of internal controls to reduce the amount of substantive testing required, which saves time and resources.

After Obtaining an Understanding of Internal Controls and Assessing Control