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CS Professional · Compliance Management, Audit and Due Diligence · Audit Process and Documentation

While auditing Kaveri Textiles Ltd, which uses an automated general ledger, the audit team wants to find non-standard journal entries such as a one-off impairment adjustment posted at year end. Which approach does SA 315 indicate is likely to identify such entries more easily?

Computer-assisted audit techniques are the suitable approach, because SA 315 notes that in automated ledger systems non-standard journal entries may exist only in electronic form and are therefore more easily identified through such techniques than by inspecting printed summaries.

  1. AInspecting only the printed trial balance
  2. BUsing computer-assisted audit techniques, because such entries may exist only in electronic formCorrect
  3. CSending external confirmations to all debtors
  4. DRelying on management's representation that no unusual entries exist

Explanation

SA 315 states that when automated procedures maintain the general ledger, non-standard journal entries may exist only in electronic form and may be more easily identified through computer-assisted audit techniques. A printed trial balance would not reveal individual entries, and representations alone are not evidence of completeness.

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