If the predominantly substantive approach preliminary audit strategy is used, planned detection risk will be:
A) moderate or high.
B) at the higher level.
C) high or very high.
D) low or very low.

Question

Quizplus · Accepted Answer

When a predominantly substantive approach is used in an audit, it means the auditor plans to rely more on substantive procedures (tests of details and substantive analytical procedures) to detect material misstatements at the assertion level. This approach is typically adopted when the auditor assesses control risk as high, implying that internal controls are not effective. Therefore, to compensate, the auditor plans for a lower detection risk to reduce the overall audit risk to an acceptably low level. A low or very low planned detection risk means the auditor intends to perform more substantive testing to catch potential misstatements.

If the Predominantly Substantive Approach Preliminary Audit Strategy Is Used