Question: AP3.10 (LO 5) Basic Audit strategy The audit partner in charge of the audit of Big Boy Freight Inc. (BBF) planned to obtain evidence of

AP3.10 (LO 5) Basic Audit strategy The audit partner in charge

AP3.10 (LO 5) Basic Audit strategy The audit partner in charge of the audit of Big Boy Freight Inc. (BBF) planned to obtain evidence of BBF's revenue recognition by relying on internal cont than any substantive tests of detail. BBF receives most freight payments in advance and holds them eferred (unearned) revenue account, transferring the appropriate amount to sales revenue when goods are transported. However, during subsequent testing of internal controls, a significant number of inst tances occurred where revenue was incorrectly recognized immediately upon customers' payments in advance, rather than when goods were actually shipped. Required Discuss the type of strategy planned by the audit partner. Why is it no longer appropriate after the initial testing of controls? Source: Adapted from the CA Program's Audit & assurance exam, July 2010

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