At every audit engagement the auditor is required to consider that there could be significant risks of misstatement for revenue recognition.At ABC Ltd. ,the auditor has concluded that,yes,there are material risks of misstatement associated with revenue recognition.How does this affect the extent of testing for accounts receivable?
A)Audit risk will be increased.
B)Inherent risks will be decreased.
C)Decreased control testing is required.
D)Increased substantive testing is required.

Question

Quizplus · Accepted Answer

When the auditor concludes that there are material risks associated with revenue recognition, it is necessary to increase substantive testing, which includes testing accounts receivable. Therefore, increased substantive testing is required in this scenario.

At Every Audit Engagement the Auditor Is Required to Consider