The less control risk there is, the smaller the amount of planned substantive evidence required.

Question

Quizplus · Accepted Answer

This is true because if there is less control risk, it means that the internal controls in place are stronger and more effective. This reduces the risk of material misstatements occurring, which in turn reduces the amount of substantive evidence needed to be gathered. Conversely, if there is higher control risk, more substantive evidence will be required to provide reasonable assurance that there are no material misstatements in the financial statements.

The Less Control Risk There Is, the Smaller the Amount