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SSC Audit Tax Finance P-II QUESTION #6216
Question 1
In the context of 'Audit Risk', if the Auditor assesses the 'Control Risk' ($CR$) as $1$ (100%), what is the logical implication for the audit strategy?
  • The auditor can reduce the amount of substantive testing
  • The auditor should rely on the internal control questionnaire
  • The auditor must adopt an extensive substantive approach✔️
  • The auditor should issue a modified report immediately
Correct Answer Explanation
If controls are weak ($CR$ is high), the auditor cannot rely on them and must perform extensive testing of transactions and balances (substantive approach).