Question

In addition to evaluating the frequency of deviations in tests of controls, an auditor should also consider certain qualitative aspects of the deviations. The auditor most likely would give broader consideration to the implications of a deviation if it was?

1) the only deviation discovered in the sample.
2) identical to a deviation discovered during the prior year's audit.
3) caused by an employee's oversight.
4) initially concealed by a forged document.

Answer 1

An auditor would likely give broader consideration to a deviation initially concealed by a forged document, as this implies intentional wrongdoing and has more serious implications than a simple oversight.

Step-by-step explanation:

An auditor should consider qualitative aspects of deviations besides just their frequency. In this scenario, the deviation most likely to receive broader consideration would be one that was initially concealed by a forged document. This kind of deviation indicates a potential for intentional wrongdoing or fraud, which has more serious implications than a deviation that is an oversight or error. Deliberate deception, such as forgery, suggests that the controls cannot be relied upon to prevent or detect misstatements.

A deviation that is identical to one from a prior year's audit might also raise concerns about the persistent nature of the control issue. However, a deviation caused by an employee's oversight might be seen as less severe unless it indicates a systematic problem, and a single deviation may not warrant extensive scrutiny unless it points to a larger issue.