While Substantive Procedures May Support the Accuracy of Underlying Records,these

question 57

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:

Payroll Checks

Payments made to employees for the work they have done, often processed through a company's payroll system.

Current Liabilities

Current liabilities are obligations a company needs to pay off within a year, such as accounts payable, short-term loans, and accrued expenses.

Company's Liquidity

A measure of a firm's ability to meet its short-term obligations using its most liquid assets.

Internal Accounting Control

Procedures and policies implemented by a company to ensure the integrity and accuracy of its financial and accounting information.