Which of the following is a correct statement regarding general controls?
A)Auditors should evaluate the effectiveness of application controls before evaluating general controls.
B)General controls have a pervasive effect on the effectiveness of application controls.
C)Ineffective general controls have no impact on the potential for material misstatements across all system applications.
D)General controls have no impact on audit testing.

Question

Quizplus · Accepted Answer

General controls have a pervasive effect on the effectiveness of application controls. This means that if the general controls are not effective, it can impact the effectiveness of application controls across all system applications. Therefore, auditors should evaluate general controls before evaluating the effectiveness of application controls. Option A is incorrect because it suggests that application controls should be evaluated before general controls. Option C is incorrect because it contradicts the fact that ineffective general controls can have a significant impact on material misstatements. Option D is incorrect because general controls have a direct impact on audit testing.

Which of the Following Is a Correct Statement Regarding General