Auditing standards recognize that in instances where a significant amount of audit evidence is in electronic form, it may not be possible to reduce detection risk to an acceptable level by performing only substantive tests.

Question

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This statement is true. Electronic audit evidence may require additional procedures beyond substantive tests to reduce detection risk to an acceptable level. This can include testing the effectiveness of IT controls or performing data analytics to identify unusual transactions or patterns.

Auditing Standards Recognize That in Instances Where a Significant Amount