Internal controls that the auditor expects to rely on to reduce substantive testing must be tested.

Question

Quizplus · Accepted Answer

This statement is true. The auditor cannot simply rely on internal controls without testing them to ensure they are functioning effectively. This is because if there are any weaknesses or breakdowns in the controls, the risk of material misstatement increases and this may require more substantive testing to be done. Therefore, it is essential for auditors to test internal controls that are relied upon to reduce substantive testing.

Internal Controls That the Auditor Expects to Rely on to Reduce