CA Inter P5 · Chapter 3 · Question 4 of 13
The auditor of Saanvi Realty Ltd. has identified revenue recognition on long-term contracts as a significant risk and plans to respond using only substantive procedures. Under SA 330, those procedures must:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Include tests of details
Explanation
SA 330 requires that when the approach to a significant risk consists only of substantive procedures, those procedures shall include tests of details. Substantive analytical procedures alone are not considered sufficient for a significant risk, and inquiry alone never provides sufficient appropriate evidence.
More Risk Assessment and Internal Control MCQs
- Q6At Ishaan Logistics Ltd., the stores keeper and the security guard together removed goods from the warehouse and prepared matching false…
- Q7In Vritika Stores Pvt. Ltd., the cashier who receives cash from customers also posts entries to the customers' ledger accounts. This…
- Q8The auditor of Harshil Steel Ltd. tested a control over credit approvals last year and found it effective. The control mitigates a…
- Q9Which of the following is a test of control rather than a substantive procedure?
- Q10Which of the following is an application control in an IT environment?