8.1 subs prdrs and assertions

Question 1

obj of subs prdrs

Answer 1

it is to supplement control testing to determine if client acc records are materially correct and reconcile them to the FS on which the adt will form opinion

Question 2

nature, time and extent of adt prdrs

Answer 2

nature, time and extent of adt prdrs are determined in response to the risk assessment for each sig. acc and relevant assertion for AR. this involves a lot of professional judgement

Question 3

IR

Answer 3

IR risk factors such as complexity, subjectivity and uncertainty cannot be influenced by adtr

Question 4

CR

Answer 4

when IC are considered ineffective, risk of MM high,

this means adt will not perform any control testing as no assurance is obtained

Question 5

DR

Answer 5

After control assmnt and IR assmnt, DR dtermined

if IR and CR combined is low, DR set low

Question 6

low IR and low CR

Answer 6

control testing assessed reasonable assurance thus reliable. thus a few subs prdrs will be performed

Question 7

low IR and mediumCR//low CR and high IR

Answer 7

limited control testing can not be relied on some subs prdrs will be performed

Question 8

medium CR and high IR // high CR and low IR

Answer 8

considerable subs prds

Question 9

adt approach

Answer 9

low DR-subs approach
high DR -combined adt approach