Which of the Following Is a Limitation of Computer-Assisted Audit

question 13

Multiple Choice

Which of the following is a limitation of computer-assisted audit tools?

• A) These tools cannot replace skilled forensic accountants, but rather allow them to focus their efforts on the highest-risk journal entries.
• B) These tools cannot analyze 100% of the data, but rather can choose and analyze samples from the journal entry database.
• C) The conclusions arrived at using these tools cannot be supported with substantial quantitative data.
• D) The forensic accountant will have to manually review the general ledger even after using these tools.

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Definitions:

Fixed Costs

Expenses that remain constant for a company irrespective of the level of production or sales.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels, providing a more relevant comparison of actual to budgeted performance.

Total Variable Cost

The sum of all variable costs (costs that change with production volume) involved in producing a specific level of output.

Activity Declines

A reduction in the level of operations, production, or business activities.