Tests of controls must be performed if control risk is set below the maximum level.

Question

Quizplus · Accepted Answer

Tests of controls are performed in order to determine whether or not a control is operating effectively. These tests are typically conducted when control risk is set below the maximum level, as this indicates that the auditor has determined that the controls are likely to be effective. If control risk is at the maximum level, there is no need to test the controls as the auditor has assumed that they are not effective.

Tests of Controls Must Be Performed If Control Risk Is