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Why Should an Auditor Not Rely on Substantive Testing to the Exclusion

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Essay

Why should an auditor not rely on substantive testing to the exclusion of testing internal controls?


Definitions:

Total Asset Turnover

A metric assessing how effectively a company utilizes its assets to produce income.

Return on Total Assets

A financial ratio that measures a company's ability to generate earnings from its total assets.

Bonds

Fixed income investments representing a loan made by an investor to a borrower, typically corporate or governmental, that pays back with interest.

Par Value

The stated value or face amount of a bond, stock share, or coupon as declared by the issuing entity.

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