Question

When performing ADA as a substantive test, the auditor:

a) relies solely on the client's system of internal controls.
b) uses ADA to match electronic information that otherwise would have been audited manually.
c) uses ADA to identify high-risk transactions and balances and then audits those high-risk items with traditional audit tests.
d) uses ADA to identify breakdowns in the client's system of internal control.

Answer 1

ADA, as a substantive test in auditing, is primarily used to match electronic information, increasing the effectiveness of the audit process and not solely depending on the client's internal controls.

Step-by-step explanation:

When performing Attribute-Based Access Control (ADAC) as a substantive test, the auditor does not rely solely on the client's system of internal controls. Rather, ADAC is used to enhance the efficiency and effectiveness of the audit process by allowing auditors to match electronic information that would otherwise be audited manually. Additionally, ADAC can facilitate the identification of high-risk transactions and balances, which are then examined more carefully through traditional audit procedures. This tool can also assist in identifying breakdowns in the client's system of internal control, allowing auditors to focus on areas where the risk of misstatement is higher. However, the correct answer in the context of the options provided is that an auditor using ADAC mainly utilizes it to match electronic information as part of the auditing process, corresponding to option b).