Tests of controls are performed to support a reduced assessment of detection risk.

Question

Quizplus · Accepted Answer

Tests of controls are performed to evaluate the effectiveness of an entity's internal controls, not directly to support a reduced assessment of detection risk. Detection risk relates to the risk that auditors fail to detect material misstatements, and while effective controls can indirectly affect this risk, tests of controls primarily aim to assess control risk.

Tests of Controls Are Performed to Support a Reduced Assessment