Which of the following explanations best describes why an auditor may decide to reduce tests of details for a particular audit objective?
A. Analytical procedures have revealed no unusual or unexpected results.
B. The audit is being performed soon after the balance sheet date.
C. Audit staff are experienced in performing the planned procedures.
D. There were many transactions posted to the account during the period
Answer:A
Choice "A" is correct. If analytical procedures have revealed no unusual or unexpected results, the auditor may decide to reduce tests of details for a particular audit objective. Substantive analytical review procedures may be sufficient to reduce the planned level of detection risk to an acceptably low level.
Choice "B" is incorrect. This is irrelevant as to whether test of details should be increased or decreased. The auditor should plan substantive procedures to be responsive to the planned level of detection risk. Substantive procedures include tests of details and substantive analytical procedures.
Choice "C" is incorrect. This is irrelevant to whether tests of details should be increased or decreased. The auditor should plan substantive procedures to be responsive to the planned level of detection risk.
Choice "D" is incorrect. Tests of details are more likely to be performed when a large number of transactions were posted to an account during the period.