SOFA-CFE · Question #299
The higher the degree of that reliance, the more time-consuming and costly the audit process is likely to be.
The correct answer is B. False. B is correct because the statement has the relationship backwards. In auditing, when auditors place a higher degree of reliance on a client's internal controls, they can reduce the scope of substantive testing - making the audit less time-consuming and costly, not more. Why A…
Question
The higher the degree of that reliance, the more time-consuming and costly the audit process is likely to be.
Options
- ATrue
- BFalse
How the community answered
(30 responses)- A23% (7)
- B77% (23)
Explanation
B is correct because the statement has the relationship backwards. In auditing, when auditors place a higher degree of reliance on a client's internal controls, they can reduce the scope of substantive testing - making the audit less time-consuming and costly, not more.
Why A is wrong: Choosing True assumes that greater reliance adds work, but the opposite is the case - reliance on internal controls is a substitute for extensive substantive procedures. The whole point of testing and relying on controls is to achieve audit efficiency.
Memory tip: Think of internal control reliance as a shortcut. The more you trust the shortcut (controls), the less ground you have to cover manually (substantive tests). More reliance = less work, not more.
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