As the acceptable level of detection risk decreases,an auditor may change the
A) Timing of tests of controls by performing them at an interim date rather than at year-end.
B) Nature of substantive procedures from less effective to more effective procedures.
C) Timing of tests of controls by performing them at several dates rather than at one time.
D) Assessed level of risk of material misstatement to a higher amount.

Question

Quizplus · Accepted Answer

As the acceptable level of detection risk decreases, the auditor may change the nature of substantive procedures from less effective (e.g. inquiry, analytical procedures) to more effective procedures (e.g. testing of details). This is because the lower the acceptable level of detection risk, the higher the level of assurance required, and more effective substantive procedures provide higher assurance. The timing of tests of controls and the assessed level of risk of material misstatement are not directly affected by a change in detection risk.

As the Acceptable Level of Detection Risk Decreases,an Auditor May