Question

An auditor may decide not to perform tests of controls related to the control activities within the computer portion of the client's internal control. Which of the following would not be a valid reason for choosing to omit such test?

A) The controls duplicate operative controls existing elsewhere.
B) There appear to be major weaknesses that would preclude reliance on the stated procedure.
C) The time and dollar costs of testing exceed the time and dollar savings in substantive testing if the tests show the controls to be operative.
D) The controls appear adequate.

Answer 1

An auditor may omit tests of controls in the computer portion of internal control for various reasons, except if the controls appear adequate, as it does not make sense to avoid testing sufficiently operational controls.

Step-by-step explanation:

An auditor may decide to omit tests of controls related to the control activities within the computer portion of the client's internal control for several reasons. Among them, a valid reason could be if the controls duplicate operative controls existing elsewhere (Option A). Another valid reason is if there appear to be major weaknesses that would preclude reliance on the stated procedure, making the controls ineffective (Option B). Additionally, if the time and dollar costs of testing exceed the time and dollar savings in substantive testing, this may also be a justifiable reason to omit such tests (Option C). However, the idea that an auditor would omit tests because the controls appear adequate (Option D) does not make sense as adequate controls are typically what an auditor seeks to rely on for planning the nature, timing, and extent of substantive testing.