When there are numerous property and equipment transactions during the year, an auditor planning to set control risk at low usually plans to obtain an understanding of internal control and to perform

Question

Quizplus · Accepted Answer

When there are numerous property and equipment transactions during the year and the auditor plans to set control risk at low, the auditor should obtain an understanding of internal control and perform tests of controls to determine if the controls are operating effectively. In addition, the auditor should perform limited tests of current year property and equipment transactions to ensure that the transactions have been accurately recorded and classified. This approach will allow the auditor to provide reasonable assurance that the financial statements are free of material misstatement. Extensive tests of property and equipment balances at the end of the year or analytical procedures alone would not be sufficient to achieve this level of assurance.

When There Are Numerous Property and Equipment Transactions During the Year