Auditors use the results of the substantive tests of transactions of sales and the collection cycle to determine the extent to which inherent risk is satisfied for each accounts receivable balance-related audit objective.

Question

Quizplus · Accepted Answer

Auditors use the results of substantive tests of transactions to assess the effectiveness of internal controls and to detect material misstatements, not to determine the extent to which inherent risk is satisfied. Inherent risk is assessed earlier in the audit process, during the risk assessment phase, and influences the nature, timing, and extent of further audit procedures.

Auditors Use the Results of the Substantive Tests of Transactions