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CMA Intermediate · Corporate Accounting and Auditing · Audit Engagement, Audit Program, Audit Documentation and Audit Evidence

Sundaram Textiles Ltd uses an image processing system and discards paper purchase invoices after scanning. What does SA 500 say about the effect of such electronic availability on audit procedures?

The nature and timing of audit procedures may be affected, because source documents such as purchase orders and invoices may exist only electronically or may be discarded after scanning. The standard does not reject electronic records or waive tests of details.

  1. AThe nature and timing of audit procedures may be affected because source documents may exist only in electronic form or be discarded after scanningCorrect
  2. BThe auditor must reject electronic records as audit evidence
  3. CAudit procedures must be performed only after the year end
  4. DThe auditor need not perform tests of details for such documents

Explanation

SA 500 notes that the nature and timing of procedures may be affected because some data is available only electronically or at certain points in time, and source documents such as invoices may be discarded after scanning. It does not bar electronic evidence or dispense with tests of details.

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