7) In an environment that is highly automated an auditor determines that it is not possible to reduce detection risk solely by using substantive test of transactions. Under these circumstances the auditor most likely would: Perform test of controls to support a lower level of assessed risk. Increase sample size to reduce sampling risk and detection risk. Adjust the materiality level and consider the effect on inherent risk Apply analytical procedures and consider the effect on control risk

Answer- Perform test of controls to support a lower level of assessed risk In an environment that is…

Answered: 7) In an environment that is highly…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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7) In an environment that is highly automated an auditor determines that it is not possible to reduce detection risk solely by using substantive test of transactions. Under these circumstances the auditor most likely would:

		Perform test of controls to support a lower level of assessed risk.
		Increase sample size to reduce sampling risk and detection risk.
		Adjust the materiality level and consider the effect on inherent risk
		Apply analytical procedures and consider the effect on control risk

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