As the acceptable level of detection risk decreases, an auditor may change the:
A)timing of substantive tests by performing them at an interim date rather than at balance date.
B)assessed level of inherent risk to a higher amount.
C)timing of tests of controls by performing them at several dates rather than at one time.
D)nature of substantive tests from a less effective to a more effective procedure.

Question

Quizplus · Accepted Answer

As acceptable level of detection risk decreases, the auditor wants a higher level of assurance, which can be achieved by changing the nature of substantive tests from a less effective to a more effective procedure. Performing substantive tests at an interim date (choice A) and testing controls at several dates (choice C) might be helpful, but they do not directly increase the effectiveness of substantive tests. Assessing inherent risk to a higher amount (choice B) is not logical because it will increase the amount of audit work needed, which is the opposite of what is desired.

As the Acceptable Level of Detection Risk Decreases, an Auditor