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The auditor of a truck manufacturer plans to place reliance on the internal control system in respect of the purchases and payables cycle, and designs tests of controls to ensure that controls have been operating effectively for the whole accounting period. The results of testing show that one control was not operating effectively for one month in the year during the employment of a temporary clerk. Follow-up of the exceptions shows that they did not lead to errors in the accounting records. Which of the following conclusions is most appropriate? A. An alternative control must be identified and tested for the whole accounting period before a decision on the level of substantive procedures can be made. B. The level of substantive procedures may be reduced for eleven months and the remaining month tested as a separate population. C. The level of substantive procedures may be reduced throughout the year but the error should be reported to management. D. The control is not reliable and therefore the level of substantive procedures cannot be reduced. |