Question

An auditor may compensate for a weakness in internal control by increasing the quantity of the:

A. Extent of tests of controls.
B. Extent of substantive tests.
C. Extent of detection risk.
D. Extent of inherent risks.

Answer 1

An auditor compensates for internal control weaknesses by increasing the extent of substantive tests to ensure financial statements are free from material misstatements.

Step-by-step explanation:

When an auditor encounters a weakness in internal control, they may compensate for this by increasing the extent of substantive tests. This is because substantive tests are performed to detect material misstatements in the financial statements, irrespective of the effectiveness of internal controls. By conducting more thorough and detailed substantive tests, the auditor is able to gain the necessary assurance that the financial statements are free from material misstatement, thereby mitigating the effect of the identified control weakness.