An auditor plans to apply substantive tests to the details of asset and liability accounts as of an interim date rather than as of the balance sheet date. The auditor should be aware that this practice
A) Eliminates the use of certain statistical sampling methods that would otherwise be available.
B) Presumes that the auditor will reperform the tests as of the balance sheet date.
C) Should be especially considered when there are rapidly changing economic conditions.
D) Potentially increases the risk that errors which exist at the balance sheet date will not be detected.

Question

Quizplus · Accepted Answer

Planning to apply substantive tests to the details of asset and liability accounts as of an interim date instead of the balance sheet date potentially increases the risk that errors which exist at the balance sheet date will not be detected. This is because the information used for the tests is not up-to-date and may not reflect changes that occurred between the interim date and the balance sheet date. Therefore, the auditor should carefully consider the potential risks and ensure that appropriate procedures are in place to detect any material misstatements that may have occurred during the period between the interim date and the balance sheet date.

An Auditor Plans to Apply Substantive Tests to the Details