For financial statement audit purposes, when auditing debt obligations and stockholders' equity transactions, the auditor will most likely perform a substantive audit, and therefore will not perform tests of controls for the debt and equity accounts.

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Quizplus · Accepted Answer

Substantive audit procedures are used to gather direct evidence about the completeness, accuracy, and validity of an account balance or transaction. Tests of controls, on the other hand, are used to assess the effectiveness of internal controls and are typically not performed on debt and equity accounts because they do not involve routine transactions that require control procedures. Therefore, the statement is true that the auditor will most likely perform substantive audit procedures for debt obligations and stockholders' equity transactions.

For Financial Statement Audit Purposes, When Auditing Debt Obligations and Stockholders