If an auditor determines that a client company's internal controls are producing reliable and complete financial information, the auditor will rely upon the internal control system and:
A) reduce the extent of controls testing in the interim phase of the financial statement audit.
B) reduce the planned substantive testing during the financial statement audit.
C) increase the amount of evidence collected during the financial statement audit.
D) increase the planned substantive testing during the financial statement audit.

Question

Quizplus · Accepted Answer

If the auditor determines that the client company's internal controls are producing reliable and complete financial information, then the auditor can reduce the extent of controls testing and instead rely on the internal control system. This means that the auditor can also reduce the planned substantive testing during the financial statement audit, as the internal control system is dependable. However, it is important to note that the auditor should still perform some level of substantive testing to ensure that the financial statements are free of material misstatements.

If an Auditor Determines That a Client Company's Internal Controls