Where a significant amount of evidence is in electronic form:
A) audit risk decreases.
B) acceptable assurance usually increases.
C) it may not be possible to reduce detection risk to an acceptable level by performing only substantive tests.
D) it is usually impractical to evaluate controls.

Question

Quizplus · Accepted Answer

When a significant amount of evidence is in electronic form, it may not be possible to reduce detection risk to an acceptable level by performing only substantive tests. This is because substantive tests may not detect all material misstatements, particularly those caused by a breakdown in internal controls over electronic data. Therefore, additional testing of controls may be necessary to reduce detection risk to an acceptable level.

Where a Significant Amount of Evidence Is in Electronic Form