The highest cost audit will be incurred when the auditor expected that the internal control system would:
A) be effective, but the auditor found extensive control test deviations and significant errors during tests of transactions.
B) have few effective controls, but client's personnel were well-trained and knowledgeable.
C) have few effective controls, and tests of balances found many errors.
D) be very sophisticated, and the tests of controls confirmed this.

Question

Quizplus · Accepted Answer

The highest cost audit will be incurred when the auditor expected the internal control system to be effective, but extensive control test deviations and significant errors were found during transaction tests. This is because the auditor will need to spend more time and resources investigating the reasons for the control failures and conducting additional procedures to obtain sufficient evidence to support their opinion on the financial statements. Choices B, C, and D do not necessarily result in higher audit costs.

The Highest Cost Audit Will Be Incurred When the Auditor