When control risk is assessed as low for assertions related to payroll, substantive tests of payroll balances most likely would be limited to applying analytical procedures and:

Question

Quizplus · Accepted Answer

Choice "D" is correct. If the control risk is assessed as low, less substantive testing is necessary. In such an instance, substantive testing would normally be limited to analytical procedures and recalculating yearend accruals. Choice "A" is incorrect. Observing distribution of paychecks is a test of controls, not a substantive test. Choice "B" is incorrect. Footing and crossfooting the payroll register is an important substantive test, but it is limited in its effectiveness. Even if control risk is assessed as low, more effective substantive procedures should be performed. Choice "C" is incorrect. Inspection of payroll tax returns is an extensive substantive test that would be performed if the control risk were assessed as high.

When Control Risk Is Assessed as Low for Assertions Related