If tests of controls and substantive tests of transactions related to perpetual inventory records reveal controls over perpetuals are effective, the auditor is justified in reducing the extent of tests of details of inventory.

Question

Quizplus · Accepted Answer

If tests of controls and substantive tests of transactions related to perpetual inventory records demonstrate that the controls over perpetually updated inventory records are reliable, the auditor might reduce the scope of testing further by relying on those strong internal controls. As a result, less amount of testing is required to achieve the same level of assurance, which saves time and resources for the auditor.

If Tests of Controls and Substantive Tests of Transactions Related