Which statement is correct?
A)Assertions affected by highly objective estimates usually require direct tests of balances.
B)The materiality of the account totally dictates the substantive procedures to be performed.
C)The evidence the auditor obtains from risk assessment procedures does not influence the substantive procedures to be performed.
D)The extent and results of control tests performed by the auditor will influence the substantive procedures to be performed.

Question

Quizplus · Accepted Answer

The extent and results of control tests performed by the auditor can provide the auditor with an understanding of the client's internal control system. Based on this understanding, the auditor can assess the risks of material misstatement and tailor the substantive procedures to be performed accordingly. Therefore, D is the correct statement. A, B, and C are incorrect because assertions affected by highly objective estimates may require indirect tests, the materiality of the account does not dictate substantive procedures in all cases, and evidence obtained from risk assessment procedures influences the overall audit approach and the nature, timing, and extent of substantive procedures to be performed.

Which Statement Is Correct