What are the four steps auditors follow when they plan to reduce assessed control risk?

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What are the four steps auditors follow when they plan to reduce assessed control risk?

Answer:
The steps are as follows:
1. Apply transaction-related audit objectives to the class of transaction being tested.
2. Identify key controls that should reduce control risk for each transaction-related audit objective.
3. Develop appropriate tests of controls for all internal controls used to reduce the preliminary assessment of control risk below maximum.
4. For potential types of misstatements related to each transaction-related audit objectives, design appropriate substantive tests of transactions, considering deficiencies in internal control and expected results of the tests of controls.

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