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

The auditor of Sagar Foods Ltd tests the audit trail for the year. The accounting software was upgraded on 1 October, and the audit trail feature was enabled on the new version only from 16 November. The old version had it enabled from 1 April to 30 September. Which statement is correct about the auditor's report?

The auditor should report that the audit trail was not enabled from 1 October to 15 November, the period between the old version's coverage and the new version's activation. The requirement is continuous operation throughout the year, so the gap is an exception, while the covered periods are not.

  1. AThe auditor should report that the audit trail was not enabled for the period 1 October to 15 November, since it must operate throughout the yearCorrect
  2. BThe auditor should report no exception, because both versions had the feature at some point
  3. CThe auditor should report an exception only for 16 November to 31 March
  4. DThe auditor should report an exception for the whole year, since the software changed

Explanation

The feature must operate throughout the year. The gap is 1 October to 15 November, when neither version recorded an audit trail. Having it at different times does not satisfy continuity. Reporting for the whole year or for the period after 16 November would misstate the gap, as those periods were covered.

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