Question

When auditing a client who uses a database management system, the auditor is principally aware of elevated risk due to the fact that ________.

1) multiple users can access and update data files.
2) the accounting information is only in one place.
3) the database administrator may lack appropriate accounting knowledge.
4) multiple users could all access the data simultaneously causing a system shutdown.

Answer 1

The elevated risk in auditing a client with a database management system is due to the ability of multiple users to access and update data files, which may lead to unauthorized or incorrect changes and affect financial reporting accuracy. Option 1.

Step-by-step explanation:

When auditing a client who uses a database management system, the auditor is principally aware of elevated risk due to the fact that multiple users can access and update data files(1). This feature, although beneficial for operational efficiency, poses a risk of unauthorized or incorrect changes to the data, which can lead to inaccuracies in financial reporting.

Having data in one place does not inherently increase risk, but it does emphasise the need for robust security controls. The database administrator's lack of accounting knowledge might be a concern, but this is typically addressed by separating duties and having checks in place from the accounting perspective. Finally, the potential for multiple users to access data simultaneously leading to a system shutdown is more of a technical performance issue than a direct auditing risk.