The extent of tests of controls in audits of nonpublic companies depends on the effectiveness of the controls and the extent to which the auditor believes they can be relied on to reduce control risk.

Question

Quizplus · Accepted Answer

The statement is true. The extent of tests of controls depends on the effectiveness of the controls and the extent to which the auditor believes they can reduce control risk. If the controls are deemed effective and reliable, the auditor may reduce testing. If the controls are deemed weak or unreliable, the auditor may need to perform additional testing.

The Extent of Tests of Controls in Audits of Nonpublic