An Auditor Plans to Apply Substantive Tests to the Details

question 19

Multiple Choice

An auditor plans to apply substantive tests to the details of asset and liability accounts as of an interim date rather than as of the balance sheet date.The auditor should be aware that this practice

• A)Eliminates the use of certain statistical sampling methods that would otherwise be available.
• B)Presumes that the auditor will reperform the tests as of the balance sheet date.
• C)Should be especially considered when there are rapidly changing economic conditions.
• D)Potentially increases the risk that errors that exist at the balance sheet date will not be detected.

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Definitions:

Lending Standards

The criteria used by financial institutions to determine the eligibility of borrowers for loans, including creditworthiness and the ability to repay.

Mortgage Interest Deduction

A tax deduction for mortgage interest paid on the first $750,000 of a mortgage debt for a primary or secondary home, aimed at incentivizing homeownership.

U.S. Public Health Service

A federal health agency that focuses on public health issues and works to improve and protect the health of the American people.

Founded

Established or initiated, often referring to the creation of an institution, organization, or country.