Question

Smith Corporation has numerous customers. A customer file is kept on disk storage. Each account in the customer file contains name, address, credit limit, and account balance. The auditor wishes to test this file to determine whether credit limits are being exceeded. The best procedure for the auditor to follow would be to:

A. Develop test data that would cause some account balance to exceed the credit limit and determine if the system properly detects such situations.
B. Develop a program to compare credit limits with account balances and print out the details of any account with a balance exceeding its credit limit.
C. Require a printout of all account balances so they can be manually checked against the credit limits.
D. Request a printout of a sample of account balances so they can be individually checked against the credit limits.

Answer 1

The best procedure for the auditor is to develop a program to compare credit limits with account balances and print out the details of any account with a balance exceeding its credit limit.

Step-by-step explanation:

The best procedure for the auditor to follow in order to determine whether credit limits are being exceeded in Smith Corporation's customer file is option B.

The auditor should develop a program to compare credit limits with account balances and print out the details of any account with a balance exceeding its credit limit.

This automated approach will efficiently identify accounts where the credit limit is exceeded and provide a detailed report for further analysis.