Question

Providing more supervision during an audit of a nonissuer in response to assessed risks of material misstatement at the financial statement level is an example of:

1) Risk assessment procedures
2) Tests of controls
3) Substantive procedures
4) Audit planning procedures

Answer 1

Increasing supervision during a nonissuer audit in response to assessed risks is part of audit planning procedures, ensuring an effective audit conduct aligned with the overall strategy.

Step-by-step explanation:

When the audit of a nonissuer is conducted and there is an increase in supervision in response to assessed risks of material misstatement at the financial statement level, this response is considered to be part of audit planning procedures. Audit planning involves developing an overall strategy for the nature, timing, and extent of audit procedures to be performed. This heightened supervision ensures that the audit is conducted effectively in accordance with the assessed level of risk and is coherent with the overall audit strategy. It is not indicative of risk assessment procedures, tests of controls, or substantive procedures, which each have their own specific purposes within the audit process.