Smith Corporation has numerous customers.Customer files are kept on disk storage.Each account in the customer file contains name,address,credit limit,and account balance.The auditor wishes to test these files to determine whether credit limits are being exceeded.The best procedure for the auditor to follow would be to:
A)Use generalized audit software to develop test data that would cause some account balance to exceed the credit limit and determine if the system properly detects such situations.
B)Use generalized audit software to compare credit limits with account balances and print out the details of any account with a balance exceeding its credit limit.
C)Require a printout of all account balances so they can be manually checked against the credit limits.
D)Request a printout of a sample of account balances so they can be individually checked against the credit limits.

Question

Quizplus · Accepted Answer

Using generalized audit software to compare credit limits with account balances and print out the details of any account with a balance exceeding its credit limit is the most efficient and effective way to test whether credit limits are being exceeded. This will allow the auditor to quickly identify any accounts where the credit limit has been exceeded and take appropriate action. Using test data or manually checking all account balances would be more time-consuming and less targeted. Requesting a sample of account balances may not provide a representative sample of accounts where credit limits are being exceeded.

Smith Corporation Has Numerous Customers