3. Pablo makes extensive use of controls that are supported by a written audit trail, but such trails exist only for a limited period of time. Which is a likely auditor response to this situation?
a. Request that the client maintain the written audit trails until the annual audit has been completed.
b. Perform audit tests several times throughout the year, to utilize the written audit trails when they exist.
c. Shift a greater proportion of the testing of controls closer to year-end, to reduce detection risk.
d. Assess control risk for the related controls at a high level, do not rely on the controls, and perform relatively more substantive testing instead.
Choice b is correct. The auditor would likely perform testing throughout the year in order to utilize the written documentation while it existed.
Choice a is incorrect. The auditor would not generally request that the client change its procedures to accommodate the audit.
Choice c is incorrect. Shifting audit tests to year-end is a strategy used with substantive testing, to reduce detection risk. In this case, performing tests of controls at year-end would be less effective, since the audit trail would no longer exist.
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