AICPA CPA-Auditing Exam - Topic 2 Question 125 Discussion

Actual exam question for AICPA's CPA-Auditing exam

Question #: 125
Topic #: 2

Before applying substantive tests to the details of asset accounts at an interim date, an auditor should assess:

AControl risk at a low level.

BInherent risk at a high level.

CThe difficulty in controlling the incremental audit risk.

DMateriality for the accounts tested as insignificant.
Explanation
Choice 'c' is correct. Before performing substantive tests at an interim date, the auditor must assess the difficulty in controlling the incremental audit risk from the interim date (on which the substantive procedures are performed) to the year-end date (on which an opinion is rendered).
Choice 'a' is incorrect. The auditor would not have to assess control risk at a low level in order to perform substantive tests at interim. It may simply be more efficient to perform a substantive audit. As long as the balances tested at interim are reasonably predictable with respect to amount, relative significance and composition, the account may be tested at interim.
Choice 'b' is incorrect. Generally, inherent risk should be low in order to test substantively at interim.
Choice 'd' is incorrect. If the materiality level for those accounts to be tested is insignificant, then the auditor probably would not perform any substantive testing, since it is unlikely that a material error exists in an insignificant balance.

Show Suggested Answer

Suggested Answer: C

by Miss at May 07, 2026, 02:43 PM

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Cheryl

17 days ago

I thought inherent risk should be high for substantive tests at interim, but now I'm confused because the explanation says it should be low.

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Thaddeus

22 days ago

I think we practiced a question similar to this where we had to identify risks before interim tests. I remember "c" being the right choice, but I can't recall why exactly.

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Celestina

27 days ago

I remember we discussed how assessing control risk isn't necessary for interim testing, but I still feel a bit unsure about the specifics.

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