Question

After the auditor has prepared a flowchart of an accounting process and the internal accounting controls surrounding that process, he or she decides that appropriately designed controls are not in place. Therefore, he or she would

A) plan to perform substantive tests to obtain assurance.

B) plan to issue a qualified opinion on internal control over financial reporting.

C) investigate the possibility of fraud.

D) test controls to confirm that conclusion.

Answer 1

If Internal Controls are weak there is higher possibility that appropriate records are not kept or financial statements are not free from material misstatement

when internal controls are weak auditor are likely to perform more substansive test to gain realibility on financial statement as substansive test are examination of financial statements & supporting documenst & Vice versa.

Hence in this case if auditor finds that appropriate controls are not in place, he or she would plan to perform substansive test to obtain assurance.

Option A is correct

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