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CMA Intermediate · Corporate Accounting and Auditing · Audit Risk, Internal Control, Internal Check and Internal Audit

Which of the following is a circumstance in which, according to SA 315, manual elements in internal control may be more suitable than automated ones?

Manual elements may be more suitable for large, unusual or non-recurring transactions where judgment and discretion are needed. Automated controls are better for high-volume processing, complex calculations and consistently applying predefined business rules, which is why the other choices describe IT strengths.

  1. AProcessing large volumes of recurring payroll entries
  2. BPerforming the same complex calculation on every transaction
  3. CLarge, unusual or non-recurring transactions requiring judgment and discretionCorrect
  4. DApplying predefined business rules consistently

Explanation

SA 315 lists large, unusual or non-recurring transactions, hard-to-predict errors, changing circumstances outside an automated control, and monitoring automated controls as suited to manual elements. The other options describe strengths of IT: volume processing, complex calculations and consistent rule application.

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