Which of the Following Strategies Will a CPA Most Likely

question 32

Multiple Choice

Which of the following strategies will a CPA most likely consider in auditing an entity that processes most of its financial data only in electronic form,such as a paperless system?

• A)Continuous monitoring and analysis of transaction processing with an embedded audit module.
• B)Increased reliance on internal control activities that emphasize the segregation of duties.
• C)Verification of encrypted digital certificates used to monitor the authorization of transactions.
• D)Extensive testing of firewall boundaries that restrict the recording of outside network traffic.

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Definitions:

Horizontal Analysis

This is a financial analysis method that compares historical financial information over a series of reporting periods to identify trends and growth patterns.

Percentage Change

The measure of the degree of change over time and is used to express the relative difference between two numbers as a percentage.

Financial Statements

Documents presenting a detailed summary of a corporation's financial health, which encompasses the income statement, balance sheet, and cash flow statement.

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, representing the ownership interest of shareholders.