Final answer:
Audit procedures for a component that isn't significant often include limited or no substantive testing, utilizing higher-level analytical procedures instead of detailed examinations. Ignoring internal controls is generally not appropriate, even if substantive testing is minimal.
Step-by-step explanation:
When auditing a component that is not significant in nature, audit procedures may involve limited or no substantive testing. This approach recognizes that, due to the component's low significance to the overall financial statements, a detailed examination is not warranted. Instead, auditors might utilize higher-level analytical procedures to assess whether there are any indicators of material misstatement without engaging in extensive examination of detailed transactions. It is not generally appropriate to completely ignore internal controls, even if substantive testing is limited. In contrast, detailed substantive testing would be reserved for more significant areas where there is a higher risk of material misstatement.
Audit procedures for a component that is not significant in nature may involve limited or no substantive testing. In such cases, auditors may rely on understanding the internal controls in place and perform analytical procedures to assess the reasonableness of the data.