If control risk is assessed as maximum, the nature of related substantive tests should be changed in which direction?

If control risk is assessed as maximum, the nature of related substantive tests should be changed in which direction?

• A. The nature of related substantive tests should be changed from more to less effective
• B. The nature of related substantive tests should be changed from less to more effective
• C. The timing of related substantive tests should be changed from year-end to an interim date.
• D. Substantive tests timing should remain unchanged when control risk is maximum.

Answer: (B)

When control risk is at its maximum, you can’t rely on controls to catch misstatements. To keep overall audit risk acceptable, you must reduce detection risk by using substantive procedures that are more persuasive. So, the substantive tests should become more effective—testing with stronger, more reliable methods, often with larger samples or more precise procedures to obtain sufficient and appropriate evidence. While timing can be adjusted in some audits, the key directional change is increasing the effectiveness of substantive procedures.

When control risk is at its maximum, you can’t rely on controls to catch misstatements. To keep overall audit risk acceptable, you must reduce detection risk by using substantive procedures that are more persuasive. So, the substantive tests should become more effective—testing with stronger, more reliable methods, often with larger samples or more precise procedures to obtain sufficient and appropriate evidence. While timing can be adjusted in some audits, the key directional change is increasing the effectiveness of substantive procedures.