AUDITING+ASSURANCE 12MONTH ACCESS CARD
AUDITING+ASSURANCE 12MONTH ACCESS CARD
17th Edition
ISBN: 9780135635131
Author: ARENS
Publisher: WILEY
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Chapter 13, Problem 22.3MCQ
To determine

Identify the situation when test of control are omitted.

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Tests of controls are most likely to be omitted when(1) an account balance reflects many transactions.(2) control risk is assessed at less than the maximum.(3) the understanding of the control structure indicates that evaluating the effectiveness of control policies and procedures is likely to be inefficient.(4) the auditor wishes to increase the acceptable level of detection risk.
Which statement is false?   a. If control risk is assessed as low, the auditor cannot plan on relying on the controls to increase substantive procedures for account balances.     b. The auditor will not perform tests of controls; instead, the auditor must plan for substantive procedures, without relying on the client's internal controls.     c. Based on obtaining an understanding through risk assessment procedures, the auditor assesses control risk ranging from high (weak controls) to low (strong controls).     d. Assessing control risk as high means the auditor does not have confidence that internal controls will prevent or detect material misstatements; assessing control risk as low has the opposite implication.
After obtaining an understanding of an entitiy's internal control, an auditor may assess control risk at the maximum level for some assertions because he A. performs tests of controls to restrict detection risk to an acceptable level. B. identifies internal control policies and procedures that are likely to prevent material misstatements. C. believes the internal control policies and procedures are unlikely to be effective. D. determines that the pertinent internal control components are not well documented.
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