When auditing financial instruments,
A) the auditor usually performs more extensive substantive testing to reduce reliance on controls.
B) analytical procedures are critical in assessing the year-end balances for financial instruments.
C) the auditor relies on statements and broker's advices from investment managers to test purchases and sales as long as controls were deemed effective.
D) tests of transactions are generally not performed.

Question

Quizplus · Accepted Answer

The auditor can rely on statements and broker's advices from investment managers to test purchases and sales if controls are deemed effective, as these documents provide evidence of the transactions.

When Auditing Financial Instruments