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(internal controls) answer the questions below: - controls of the client company appear strong. Auditors tested...

(internal controls) answer the questions below:

- controls of the client company appear strong. Auditors tested the controls and found them & operate effrctively

a.is the assess levek if Control risk High or Low?

b. is acceptable detection risk high or low?

c. Based on the acceptable detection risk, explain the scope (nature,Timing,extent) of substantive procedures to be performed?

-Controls of the client company appear strong, auditors decide not to test them.

a.is the assess levek if Control risk High or Low?

b. is acceptable detection risk high or low?

c. Based on the acceptable detection risk, explain the scope (nature,Timing,extent) of substantive procedures to be performed?

- Controls Are weak.

a.is the assess levek if Control risk High or Low?

b. is acceptable detection risk high or low?

c. Based on the acceptable detection risk, explain the scope (nature,Timing,extent) of substantive procedures to be performed?

Expert Solution

Solution :

Control risk is the risk the mistatements will not be prevented, detected or corrected by the entity's internal control.

Control risk is said to be "High" when the internal controls are weak. Likewise the control risk is said to be "Low" when the internal controls are strong and has the ability to detect, prevent and correct the material mistatements.

Detection risk is the risk that the procedures performed by the auditor, fails to detect the material misstatements.

Detection risk is said to be "High" when the control risk is Low. This is because, when the internal controls are strong, the number of misstatements that are not detected by the internal controls is less, hence the lapsed mistatements cannot be easily detected by the audit procedures performed by the auditor causing the risk to be high. Likewise, the detection risk is "Low" when the control risk is high.

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(internal controls) answer the questions below: - controls of the client company appear strong. Auditors tested...

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