An exception in a test of control provides only an indication of the likelihood of monetary misstatements in the financial statements because tests of controls do not reveal whether monetary misstatements have actually occurred.

Question

Quizplus · Accepted Answer

This statement is true. An exception in a test of control indicates that there is a higher risk that there may be monetary misstatements in the financial statements, but it does not confirm that such misstatements have occurred. Further substantive testing is required to detect whether or not material misstatements actually exist.

An Exception in a Test of Control Provides Only an Indication