AU-C 300 Planning an Audit and AS 2101 Audit Planning primarily requires auditors to _______.
A)plan the audit by assessing risk to reduce audit risk to an acceptably low level
B)perform tests of the system of internal control, or tests of account balances, transactions, or disclosures
C)make decisions about the extent and timing of detailed testing of account balances and transactions
D)rely on the client's system of internal controls

Question

Quizplus · Accepted Answer

Planning an audit primarily requires auditors to assess risk and plan the audit to reduce audit risk to an acceptably low level, as per AU-C 300 Planning an Audit and AS 2101 Audit Planning. While performing tests of the system of internal control, or tests of account balances, transactions, or disclosures, and making decisions about the extent and timing of detailed testing of account balances and transactions are also important aspects of audit planning, they are not the primary requirements. The auditors cannot rely solely on the client's system of internal controls and must evaluate it to identify risks of material misstatement.