Question

JP Industries conducts its business using IT, and the only documentation of transactions is produced through the IT system. The auditor has concluded that it is not possible to obtain sufficient appropriate audit evidence by performing only substantive procedures for a number of financial statement assertions. The auditor’s alternative strategy is to __________.

Answer 1

Perform test of controls

Step-by-step explanation:

Test of control is a procedure used by auditors in checking how effective the control used by a client entity in detecting or preventing material misstatements. Test of control may broadly be classified into

- Reperformance

- observation, and

- Inspection.

Test of control seeks to verify whether internal control measures are working. It asses the operations of internal control.

Answer 2

perform tests of controls.

Step-by-step explanation:

The method of testing controls that will provide us with greater security regarding compliance with them (whether we carry out an internal or external audit), the Auditor basically has 4 alternatives:

- Inquiry

- Observation

- Inspection

- Reperformance

They are ordered according to the degree of support that they will provide to the tests of controls that we carry out.