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CMA Intermediate · Corporate Accounting and Auditing · Application of Technology in Audit and Audit Trail

An auditor of Shreeji Textiles Ltd. uses test data to check whether the accounts payable program rejects invoices with duplicate numbers. Which approach is this?

This is auditing through the computer. By running test data through the client's actual program, the auditor tests whether embedded controls, such as duplicate invoice rejection, operate as intended. Auditing around the computer would only compare inputs with outputs without examining the processing itself.

  1. AAuditing around the computer
  2. BAuditing through the computerCorrect
  3. CSubstantive analytical review
  4. DManual re-performance of ledger posting only

Explanation

Using test data processed by the entity's own program lets the auditor examine the program's processing logic and controls directly. This is auditing through the computer. Auditing around the computer, by contrast, compares inputs to outputs without testing the processing logic.

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