While Substantive Procedures May Support the Accuracy of Underlying Records

question 45

Multiple Choice

While substantive procedures may support the accuracy of underlying records, these tests frequently provide no affirmative evidence of segregation of duties because:

• A)substantive procedures rarely guarantee the accuracy of the records if only a sample of the transactions has been tested.
• B)the records may be accurate even though they are maintained by persons having incompatible functions.
• C)substantive procedures relate to the entire period under audit, but compliance tests ordinarily are confined to the period during which the auditor is on the entity's premises.
• D)many computerized procedures leave no audit trail of who performed them, so substantive procedures may necessarily be limited to inquiries and observation of office personnel.

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Definitions:

Controllability

The principle that managers should be held accountable only for those aspects of performance that they can influence or control.

Real-Time Reporting

The process of providing immediate updates and financial information as events occur, allowing for timely decision-making and analysis.

Virtual Close

A method allowing companies to quickly estimate their financial position at any given time without waiting for the formal closing process.

Flash Reporting

A type of financial report that provides an immediate snapshot of a company's financial condition, often used for internal decision-making purposes.