Perform direct tests of account balances

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Reference no: EM13150115

An auditor determines that management integrity if high, the risk of account misstatements is low, and the client's internal controls are effective. Which of the following conclusions can be reached regarding the need to perform direct tests of account balances?

A. Direct tests should be limited to material account balances, and the extent of testing should be sufficient to corroborate the auditor's assessment of low risk.

B. Direct tests of account balances are not needed.

C. Direct tests of account balances are necessary if the audit risk was set at a low level but are not necessary if audit rish was set at a high level.

D. Direct tests should be performed on all account balances to independently verify the correctness of the financial statements.

Reference no: EM13150115

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