Question

Auditors may decide to perform some tests of controls or not perform any tests of controls,...

Auditors may decide to perform some tests of controls or not perform any tests of controls, if inherent risk is assessed as ________.

moderate or low

high or moderate

unusually high

None of these options are correct.

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Answer #1

Answer: Moderate or Low

Explanations:

Test of control is a tool or procedure of auditing for checking the accuraccy and effectiveness of the company's internal control procedures. Hence, if it is assessed that the inhereant risk in the finacial records and reports are high then the auditor should apply the test of control procedures for cheking the reasons for such missrepresentation of accounting information due to less effectiveness of the internal controls, and if it is assessed that the degree of inherent risk is low or moderate, then the auditor may or may not go for the test of controls and in such a case going for test of control would increas the quality of the audit.

*Please feel free to ask me if any more explanations are required. Please hit the thumbs up button.

Thank You..!!

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