When auditing the acquisitions and cash disbursements cycle, it is usually more efficient for the auditor to reduce the extent of tests of controls and rely primarily on substantive tests of transactions and on tests of details of balances, provided the auditor has determined control risk low.

Question

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If the auditor has determined control risk as low, it indicates that the internal controls are effective, and hence it would be appropriate for the auditor to reduce the extent of tests of controls and rely primarily on substantive tests of transactions and on tests of details of balances. This approach is more efficient and effective in detecting material misstatement in the acquisitions and cash disbursements cycle.

When Auditing the Acquisitions and Cash Disbursements Cycle, It Is