Audit & Assurance: Approach

Question 1

Two general types of audit approach

Answer 1

1. Soley substantive procedures

2. Both tests of controls and substantive procedures (combined)

Question 2

Substantive procedures

Answer 2

1. Test of details (of classes of transactions, account balances, and disclosures)
2. Substantive analytical procedures

Question 3

If control risk is HIGH, which type of audit approach will be taken?

Answer 3

Substantive approach.

Question 4

If control risk is LOW, which type of audit approach will be taken?

Answer 4

Combined approach.

Question 5

CAS 330.8 states that a test of controls should be performed to obtain sufficient audit evidence if ..

Answer 5

(a) Assessed RMM at the assertion level includes an expectation that the controls are operating effectively
(b) Substantive procedures alone cannot provide sufficient appropriate audit evidence at the assertion level (eg. high volume of low dollar transx, highly automated processing)