Professional auditing standards recognise 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 according to professional auditing standards. When a significant amount of audit evidence is in electronic form, relying solely on substantive tests may not be enough to reduce detection risk to an acceptable level. Other procedures such as testing IT controls or using computer-assisted audit techniques may also be necessary to obtain sufficient audit evidence.

Professional Auditing Standards Recognise That in Instances Where a Significant