Which of the following courses of action is most appropriate if an auditor concludes that there is a high risk of material misstatement?
A)Use smaller, rather than larger, sample sizes.
B)Perform substantive tests as of an interim date.
C)Select more effective substantive tests.
D)Increase tests of controls.

Question

Quizplus · Accepted Answer

When the auditor concludes that there is a high risk of material misstatement, the appropriate course of action is to select more effective substantive tests. This is because such tests provide direct evidence about the completeness, accuracy, and validity of the financial statement assertion. Using smaller sample sizes, performing substantive tests as of an interim date, or increasing tests of controls may not be sufficient to uncover material misstatements, particularly if the risk is high. Therefore, the best option is to select more effective substantive tests that are specifically designed to address the identified risks.

Which of the Following Courses of Action Is Most Appropriate