Question 1

An auditor is performing an audit of a nonissuer. The auditor identifies a significant risk related to the valuation of complex financial instruments. The auditor determines that substantive procedures alone cannot provide sufficient appropriate audit evidence. What should the auditor do?

Accepted Answer

Audit Strategy: Usually you can choose Substantive Only. BUT, if the system is so complex (IT/Crypto/Derivatives) that substantive is impossible, you MUST test controls.

Question 2

What mistakes do candidates make on this CPA question?

Accepted Answer

Thinking you can always just 'do more substantive work'. Sometimes the nature of the evidence requires control testing.

An auditor is performing an audit of a nonissuer. The auditor identifies a significant risk related to the valuation of complex financial instruments. The auditor determines that substantive procedures alone cannot provide sufficient appropriate audit evidence. What should the auditor do?

How to approach this question

Full Answer

Common mistakes

Practice the full CPA AUD Practice Exam 2

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