In Figure 9.9, why are there fewer substantive tests for the existence assertion than for the valuation assertion?

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FIGURE 9.9 Illustration of Accounts Receivable Assertions Assertion: Valuation-Net Accounts Receivable is stated at the proper amount at the balance sheet date. Assertion: Existence-Accounts receivable exists. at the balance sheet date. Audit strategy: Primarily substantive approach Audit strategy: Lower control risk approach Reasons for audit strategy: 1. Understaffed credit department. 2. Tests of controls in prior audits have not been cost-effective in reducing the nature, timing, and extent of substantive tests. Reasons for audit strategy: 1. There have been large numbers of sales and collection transactions during each accounting period. 2. There is a large number of small dollar balances. 3. The accounts receivable records have been well maintained in prior periods.