Question

Auditors are least likely to "audit around the computer" when:

	Input transactions are batched.
	There is a physical audit trail.
	Outputs are in hard copy form.
	Processing is primarily online and updating is real-time.

Answer 1

Ans: Auditors are least likely to "audit around the computer" when Processing is primarily online and updating is real-time

Auditing around the computer is generally used where auditor has little or no knowledge about the computer system and therefore, the auditor uses this approach for sufficient appropriate audit evidence. This approach is also used whn computer facility has not been made available to the auditor.

When auditor is satisfied that sufficient controls have been put in place for the system and they have been operating effectively and he or she can rely on such controls then auditor resorts to this approach. In this approach, auditor simply check some test data. For e.g the auditor might calculate the sales revenue by multiplying unit rate by units to see if the sales value entered in the system is been correct or not i.e., checking source document to see if the outputs generated by the sysytem is correct. Therefore, when Processing is primarily online and updating is real-time there is not manual intervention so thechances of finding error or material misstatement by auditing around the computer will not be appropriate.