After considering a client's internal controls, an auditor has concluded that they are well designed and are functioning as intended.Under these circumstances the auditor would most likely:
A) not increase the extent of predetermined substantive tests.
B) determine whether transactions are recorded to permit preparation of financial statements in conformity with generally accepted accounting principles.
C) perform reduced tests of controls to the extent outlined in the audit program.
D) determine the control procedures that should prevent or detect errors and irregularities.

Question

Quizplus · Accepted Answer

If the auditor concludes that the client's internal controls are well designed and functioning as intended, they can rely on those controls to prevent or detect material misstatements in the financial statements. Therefore, there is no need to increase the extent of predetermined substantive tests because the client's internal controls provide sufficient assurance.

After Considering a Client's Internal Controls, an Auditor Has Concluded