Extensive tests of detail for an income statement account is least likely to be required when:
A) inherent risk is high.
B) control risk is high.
C) detection risk is high.
D) analytical procedures reveal some unexpected fluctuations.

Question

Quizplus · Accepted Answer

When detection risk is high, auditors are more likely to rely on substantive testing, including tests of details, for income statement accounts. However, a high detection risk actually implies that auditors are willing to accept a higher risk that they will not detect a material misstatement, which in turn means they might perform less extensive testing, not more. In contrast, high inherent risk, high control risk, and unexpected fluctuations revealed by analytical procedures would all typically necessitate more extensive testing to gain assurance.

Extensive Tests of Detail for an Income Statement Account Is