When companies use information technology (IT) extensively, evidence may be available only in electronic form. What is an auditor's best course of action in such situations?

Question

Quizplus · Accepted Answer

Choice "C" is correct. When companies use information technology (IT) extensively and evidence is available only in electronic form, generalized audit software packages generate the programs necessary to interrogate the files and extract and analyze the data. Choice "A" is incorrect. The use of information technology does not automatically imply that control risk is high. The auditor would need to evaluate the client's controls to make this determination. Choice "B" is incorrect. Although audit software might be used to perform analytical procedures, the data would first need to be extracted from the client's system. A generalized audit software package is the best way to do this. Choice "D" is incorrect. If information technology is used extensively, the auditor would likely perform more than limited tests of controls over electronic data.

When Companies Use Information Technology (IT) Extensively, Evidence May Be