When determining the methodology for designing tests of details of balances for accounts payable:
A)supply-chain management activities has led to numerous changes in the design of systems used to initiate and record acquisition and payment activities.
B)it is relatively inexpensive to audit accounts payable.
C)performance materiality for accounts payable is set relatively low.
D)inherent risk is often set at low.

Question

Quizplus · Accepted Answer

The design of systems used to initiate and record acquisition and payment activities has been impacted by supply-chain management activities, leading to changes in the methodology for designing tests of details of balances for accounts payable. This means that auditors need to be aware of these changes and adapt their approach accordingly.

B, C, and D are incorrect because they are not relevant to the question or are inaccurate. It is not necessarily inexpensive to audit accounts payable, performance materiality is set based on the significance of the account and the risk of material misstatement, and inherent risk may be set at different levels depending on the specific circumstances of the entity being audited.

When Determining the Methodology for Designing Tests of Details of Balances