An audit strategy will include increased reliance on tests of controls when:
A)Inherent risk and control risk are low.
B)The auditor believes there is a high risk that their client's internal controls will not prevent or detect material misstatements.
C)There is a high susceptibility of assertions to material misstatements.
D)Inherent risk and control are high.

Question

Quizplus · Accepted Answer

When inherent risk and control risk are low, it indicates that the auditor has confidence in the client's internal control system's effectiveness. Therefore, the auditor may decide to increase reliance on tests of controls to assess the risk of material misstatement more efficiently.

An Audit Strategy Will Include Increased Reliance on Tests of Controls