When designing tests of controls and substantive tests of transactions for cash receipts, it is important to remember that
A) the test of controls are designed to test for monetary misstatements.
B) auditors use the same methodology for designing tests of controls and substantive tests of transactions for cash receipts as they use for sales.
C) the tests of controls are not dependent on the controls the auditor identifies.
D) the tests of controls are not dependent on whether the company being audited is publicly traded.

Question

Quizplus · Accepted Answer

Tests of controls and substantive tests of transactions for cash receipts often follow a similar methodology to that used for sales because both areas typically involve transactions that can be subject to similar types of errors or fraud. The methodology for testing these areas focuses on assessing the effectiveness of controls in place and verifying the accuracy and completeness of transaction records.

When Designing Tests of Controls and Substantive Tests of Transactions