An audit strategy will include increased reliance on tests of controls when
A) inherent risk and control are high.
B) inherent risk and control risk are low.
C) the auditor believes there is a high risk that their client's internal controls will not prevent or detect material misstatements.
D) there is a high susceptibility of assertions to material misstatements.

Question

Quizplus · Accepted Answer

When both inherent risk and control risk are assessed as low, an auditor may decide to rely more on tests of controls. This is because the low risk assessments suggest that the entity's internal controls are both effective and operating as intended, reducing the need for extensive substantive testing.

An Audit Strategy Will Include Increased Reliance on Tests of Controls