After performing additional tests of controls, the auditor reassesses control risk from the initial planning level of slightly below maximum to moderate. The auditor should now:
A) decrease the level of detection risk, and decrease substantive testing.
B) increase the level of detection risk, and increase substantive testing.
C) increase planned substantive testing.
D) increase the level of detection risk, and decrease substantive testing.

Question

Quizplus · Accepted Answer

When an auditor reassesses control risk from a higher level to a moderate level, it means they have more confidence in the internal controls than initially thought. Therefore, they can afford to take on a higher level of detection risk (because the risk of material misstatement due to control failure is now perceived to be lower) and can reduce the extent of substantive testing needed to reach an acceptable level of audit risk.

After Performing Additional Tests of Controls, the Auditor Reassesses Control