After the Auditor Planned the Audit Based on the Lower

question 28

Multiple Choice

After the auditor planned the audit based on the lower assessed level of control risk approach it was found that the tests of control did not support this approach. Although the controls were well designed they were not implemented and therefore ineffective. What audit strategy should the auditor now pursue?

• A) adopt a predominantly substantive approach.
• B) perform more extensive tests of control than originally planned.
• C) reduce the level of substantive procedures.
• D) none of the above.

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Definitions:

Output

The amount of goods or services produced by a firm, industry, or economy within a given period, an indicator of productivity.

Diagram

A simplified drawing showing the appearance, structure, or workings of something, often used in education and technical fields.

Efficiency Loss

A reduction in economic efficiency due to disparities between marginal social benefits and marginal social costs, often caused by market failures or policy interventions.

Underproduction

The condition of producing less than the optimal or expected amount of goods and services, leading to inefficient utilization of resources.