An auditor most likely would limit substantive tests of sales transactions when control risk is assessed as low for the existence or occurrence assertions concerning sales transactions and the auditor has already gathered evidence supporting
A) opening and closing inventory balances.
B) cash receipts and accounts receivable.
C) shipping and receiving activities.
D) cutoffs of sales and purchases.

Question

Quizplus · Accepted Answer

When control risk is assessed as low, it indicates that the auditor believes the internal controls are effective. If the auditor has already gathered evidence supporting cash receipts and accounts receivable, it suggests that the sales transactions are likely to be valid and properly recorded, reducing the need for extensive substantive testing.

An Auditor Most Likely Would Limit Substantive Tests of Sales