When there are numerous property and equipment transactions during the year,an auditor who plans to assess control risk at a low level usually performs:
A)Tests of controls and extensive tests of property and equipment balances at the end of the year.
B)Analytical procedures for current year property and equipment transactions.
C)Tests of controls and limited tests of current year property and equipment transactions.
D)Analytical procedures for property and equipment balances at the end of the year.

Question

Quizplus · Accepted Answer

When there are numerous property and equipment transactions during the year, an auditor who plans to assess control risk at a low level usually performs tests of controls and limited tests of current year property and equipment transactions. This approach provides evidence on the effectiveness of the client's controls over property and equipment transactions and also covers the current year's transactions, which is essential for issuing an opinion on the current year's financial statements. Analytical procedures could be used as additional substantive procedures, but they alone do not provide sufficient evidence on the completeness and accuracy of property and equipment balances. Extensive tests of property and equipment balances at the end of the year are not necessary if control risk is assessed at a low level and there is sufficient evidence that controls are operating effectively.

When There Are Numerous Property and Equipment Transactions During the Year,an