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Which TWO of the following are appropriate responses to address the increased detection
risk due to Veryan Co being a new audit client?
? Extended controls testing should be performed
? Obtain an understanding of Veryan Co
? Reduce reliance on tests of controls
? Contact the previous auditor to request working papersmaam i wanted to know why “Extended controls testing should be performed” isnt one of the answers?
in context of audit, extended means “beyond reporting date”? Or it means, as i think, “detailed”?
and also maam if the 3rd option had been “reduce reliance on controls” then that would have been an appropriate response to increased detection risk?
SEE the depiction of the audit risk model in Chapter 9 – ToCs assess the operating effectiveness of controls which is the determinant of control risk which is a component of RoMM.
This is unrelated to the increase in DR that arises because the client is NEW – i.e. we didn’t audit the opening balances of the current year’s financial statements.
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