Question

Auditors typically rely on controls when auditing the property management function, leading to less reliance on substantive testing. True or False?

A) True
B) False
C) Depends on the size of the organization
D) It varies based on the industry regulations

Answer 1

Auditors typically rely on controls when auditing the property management function, leading to less reliance on substantive testing.

Step-by-step explanation:

Auditors typically rely on controls when auditing the property management function, leading to less reliance on substantive testing. This statement is true. When auditors evaluate the property management function, they assess the internal control procedures in place. If the controls are effective, auditors can rely on them and have less need for substantive testing. Controls help to prevent errors and fraud, ensuring the accuracy of the financial statements. For example, auditors may review the controls related to rent collection, tenant screening, and maintenance requests in property management. If these controls are strong and operating effectively, auditors can have higher confidence in the reliability of the property management function and may reduce the extent of substantive testing.