If testing the operating effectiveness of controls surrounding an estimate alone does not provide sufficient appropriate audit evidence, _______.
A)the auditors should consider increasing the risk and cost associated with the audit
B)auditors also conduct tests of internal controls pertaining to the reasonableness of accounting estimates
C)auditors also conduct substantive procedures on the reasonableness of accounting estimates
D)the auditors should disregard testing of controls completely, and instead focus on substantive testing

Question

Quizplus · Accepted Answer

Auditors conduct substantive procedures on the reasonableness of accounting estimates when testing the operating effectiveness of controls alone does not provide sufficient appropriate audit evidence. This approach helps in obtaining more reliable evidence regarding the accuracy of the estimates made in the financial statements.

If Testing the Operating Effectiveness of Controls Surrounding an Estimate