Final answer:
The extent of control testing varies depending on whether the control is manual or automated. Automated controls, when supported by strong general controls, may require smaller sample sizes due to their consistency and decreased susceptibility to error. Manipulation or alteration of automated controls is possible through software changes.
Step-by-step explanation:
When testing manual or automated controls, the statement "The extent of testing depends on whether it is a manual or automated control" is true. Auditors assess both types of controls differently because automated controls, if well-designed and operating in a controlled IT environment, are generally consistent and less prone to random error compared to manual controls. Nevertheless, automated controls are not immune to error or manipulation; they can be altered intentionally or unintentionally through changes in software applications. Thus, security measures and change management in the IT environment are critical.
To ensure that controls are functioning correctly, auditors use sampling techniques. For manual controls, which are more susceptible to human error and inconsistencies, auditors may need to review a larger sample size to gain assurance. However, in the context of effective general and automated application controls, the need for a larger sample size diminishes as the consistency and reliability of the controls increase.
The effectiveness of experimental controls relates to their ability to reduce variability and allow for comparison of the impact of an independent variable on a dependent variable. These principles apply in business control testing as well, where the control environment can significantly impact the auditor's assessment and testing approach.