Substantive testing is typically used to audit shareholders' equity because:
A)the number of transactions is small.
B)controls over shareholders' equity transactions are typically weak.
C)a reliance strategy is most efficient.
D)the control environment over shareholders equity transactions is usually strong.

Question

Quizplus · Accepted Answer

Substantive testing is often used for auditing shareholders' equity due to the relatively small number of transactions involved, making it more efficient to directly test these transactions rather than rely heavily on the assessment of controls.

Substantive Testing Is Typically Used to Audit Shareholders' Equity Because