An auditor is performing an audit of a nonissuer. The auditor assesses control risk at the maximum level for all assertions. Which of the following statements is TRUE?

Answer options:

The auditor is not required to obtain an understanding of internal control.

The auditor is not required to perform tests of controls.

The auditor must issue a qualified opinion.

The auditor must perform only analytical procedures.

How to approach this question

Control Risk Max = 'Controls are garbage'. Strategy: Don't test the garbage (No Tests of Controls). Do more substantive work.

Full Answer

B.The auditor is not required to perform tests of controls.✓ Correct

If the auditor assesses control risk at the maximum, the auditor is not relying on the effectiveness of controls. Therefore, tests of controls are not required (unless substantive procedures alone are insufficient). However, the auditor must still obtain an understanding of the design and implementation of controls.

Common mistakes

Thinking you can skip the 'Understanding' phase. You can skip 'Testing', but not 'Understanding'.

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