Which of the following is a step in an auditor's decision to assess the risk of material misstatement at a low level by relying on controls?
a. Apply analytical procedures to both financial data and nonfinancial information to detect conditions that may indicate weak controls.
b. Perform tests of details of transactions and account balances to identify potential errors and irregularities.
c. Identify specific controls that are likely to detect or prevent material misstatements.
d. Document that the additional audit effort to perform tests of controls exceeds the potential reduction in substantive testing.
Answer: C
CPA Exam
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