Before applying substantive procedures to the details of asset and liability accounts at an interim date,the auditor should
A) Assess the difficulty in controlling achieved audit risk for the remainder of the period.
B) Investigate significant fluctuations that have occurred in the asset and liability accounts since the previous balance sheet date.
C) Select only those accounts which can effectively be sampled during year-end audit work.
D) Consider the compliance tests that must be applied at the balance sheet date to extend the audit conclusions reached at the interim date.

Question

Quizplus · Accepted Answer

Before applying substantive procedures to the details of asset and liability accounts at an interim date, the auditor should first assess the difficulty in controlling achieved audit risk for the remainder of the period. This is because the risk of material misstatement may increase or decrease over time, which can affect the auditor's planned procedures and the evaluation of the results obtained. Therefore, the auditor needs to consider the overall audit strategy and adjust it as necessary to ensure that the audit risk is kept within an acceptable level throughout the engagement. Choices B and C are too specific and do not address the overall audit risk. Choice D is partly correct, but compliance tests are only one type of substantive procedures, and there may be other procedures that are more appropriate or necessary, depending on the circumstances.

Before Applying Substantive Procedures to the Details of Asset and Liability