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How does the auditor respond to assess risk. Is it by using test of controls and substantive procedures, or by some other means? I am a bit confused.
Kindly advise me.Generally an unacceptable audit risk means that there are inadequqte controls otherwise the xontrols would mitigate the risk. So, tests of control probably won’t work.
If a control appears ro reduce audit risk, then it must, of course, be tested to ensure it is effetive.
If there are inadequate controls and there remains a risk of material misstatememd, the only approach the auditor can take is to increase substantive tests.
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