During substantive testing, if material misstatements have been found to exist, which of the following actions should be taken next?
A)Proceed to the audit completion in the reporting phase
B)Re-evaluate the audit risk in the planning phase
C)Re-perform detailed tests of balances
D)Re-perform an internal controls systems analysis

Question

Quizplus · Accepted Answer

When material misstatements are found during substantive testing, it indicates that the initial assessment of audit risk may have been too low. Therefore, the auditor should re-evaluate the audit risk in the planning phase to adjust the audit approach accordingly. This may involve altering the nature, timing, and extent of audit procedures to adequately address the identified risks.

During Substantive Testing, If Material Misstatements Have Been Found to Exist