Before applying substantive tests to the details of asset accounts at an interim date, an auditor should assess:

Question

Quizplus · Accepted Answer

Choice "C" is correct. Before performing substantive tests at an interim date, the auditor must assess the difficulty in controlling the incremental audit risk from the interim date (on which the substantive procedures are performed) to the year-end date (on which an opinion is rendered). Choice "A" is incorrect. The auditor would not have to assess control risk at a low level in order to perform substantive tests at interim. It may simply be more efficient to perform a substantive audit. As long as the balances tested at interim are reasonably predictable with respect to amount, relative significance and composition, the account may be tested at interim. Choice "B" is incorrect. Generally, inherent risk should be low in order to test substantively at interim. Choice "D" is incorrect. If the materiality level for those accounts to be tested is insignificant, then the auditor probably would not perform any substantive testing, since it is unlikely that a material error exists in an insignificant balance.

Before Applying Substantive Tests to the Details of Asset Accounts