When there are numerous property and equipment transactions during the year,an auditor planning to assess the risk of material misstatement at a low risk level must perform.
A)Tests of controls and extensive tests of property and equipment balances at the end of the year.
B)Extensive tests of 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

To assess the risk of material misstatement at a low risk level with numerous property and equipment transactions during the year, the auditor should perform tests of controls to ensure the effectiveness of the internal controls over property and equipment transactions. Additionally, the auditor should perform limited tests of current year property and equipment transactions to ensure accuracy and completeness of these transactions. Extensive tests of property and equipment balances at the end of the year may not be necessary as these balances can be substantiated through analytical procedures. Therefore, choice C of performing tests of controls and limited tests of current year property and equipment transactions is the best option to assess the risk of material misstatement at a low risk level.

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