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CA Final · Advanced Auditing, Assurance and Professional Ethics · Materiality, Risk Assessment and Internal Control

Anand Retail Ltd has introduced a new ERP. The auditor wishes to explain to the audit team how IT generally benefits internal control, as per SA 315. Which statement is correct?

According to SA 315, IT generally benefits internal control by applying predefined rules consistently, improving accuracy and timeliness, aiding analysis and monitoring, reducing the risk of control circumvention, and enhancing segregation of duties through security controls. It does not remove all risks or the need for monitoring.

  1. AIT can reduce the risk that controls will be circumvented and enhance segregation of duties through security controls in applications, databases and operating systemsCorrect
  2. BIT eliminates the need to monitor the effectiveness of controls
  3. CIT removes all risks to internal control arising from the information system
  4. DIT benefits control only by reducing the volume of transactions

Explanation

SA 315 states that IT generally helps by consistently applying business rules, improving timeliness and accuracy, supporting analysis and monitoring, reducing the risk of circumvention and enhancing segregation of duties through security controls. It does not eliminate risks or monitoring, which makes the other options wrong.

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