Before applying principal substantive tests to the details of accounts at an interim date prior to the balance sheet date, an auditor should:

Question

Quizplus · Accepted Answer

Choice "C" is correct. Before performing substantive tests at an interim date, an auditor should consider whether the amounts of the year-end balances selected for interim testing are reasonably predictable with respect to amount, relative significance and composition. Choice "A" is incorrect. It is not necessary for control risk to be assessed at a low level for the assertions relating to the accounts that will be substantively tested at an interim date. 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. Material account balances, such as accounts receivable and inventory, are commonly tested at an interim date. Choice "D" is incorrect. The written representation letter will not be obtained until after year-end.

Before Applying Principal Substantive Tests to the Details of Accounts