Describe the three basic steps an auditor should follow when designing tests of controls and substantive tests of transactions.

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Describe the three basic steps an auditor should follow when designing tests of controls and substantive tests of transactions.


Answer:

The three basic steps in designing tests of controls and substantive tests of transactions are:

• Determine key internal controls for each audit objective.
• Design tests of controls for each control used to support a reduced control risk.
• Design substantive tests of transactions to test for monetary misstatements for each objective.

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