Auditing standard No.5 describes a ________ approach to selecting controls to be tested.
A) hybrid
B) bottom-up
C) top-down
D) This standard does not discuss the selection of controls to be tested.

Question

Quizplus · Accepted Answer

According to Auditing Standard No. 5, auditors should use a top-down approach when selecting controls to be tested. This approach starts with understanding the company's financial reporting process and then focuses on identifying the key controls that are in place to prevent or detect material misstatements in the financial statements. The top-down approach ensures that auditors focus on the most important controls and reduces the risk of overlooking significant deficiencies or weaknesses in the controls.