An auditor plans to apply substantive tests to the details of asset and liability accounts as of an interim date rather than as of the balance sheet date.The auditor should be aware that this practice
A)Eliminates the use of certain statistical sampling methods that would otherwise be available.
B)Presumes that the auditor will reperform the tests as of the balance sheet date.
C)Should be especially considered when there are rapidly changing economic conditions.
D)Potentially increases the risk that errors that exist at the balance sheet date will not be detected.

Question

Quizplus · Accepted Answer

By testing the details of accounts as of an interim date, the auditor risks missing any changes or errors that occurred between the interim date and the balance sheet date. This increases the risk that errors that exist at the balance sheet date will not be detected, hence choice D is correct. Choice A is incorrect because the use of statistical sampling methods is not eliminated by testing at an interim date. Choice B is incorrect because the practice does not presume that the auditor will reperform tests as of the balance sheet date. Choice C is incorrect because rapidly changing economic conditions would not be a specific factor that would warrant testing at an interim date.

An Auditor Plans to Apply Substantive Tests to the Details