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Explain the concept of benchmarking and its benefits to the auditor.
Benchmarking is the audit testing strategy that allows the auditor to carry forward the benefit of certain application controls testing into future periods.
The concept behind benchmarking is the idea that a computer will continue to perform any given procedure in exactly the same way until such time as the program (or application) is changed. This means that if the auditor can show that there has been no change in the program or the application, the auditor can continue to rely on the results of testing the program or application in previous periods.
The auditor is likely to be more successful in showing the absence of change if the overall control environment is strong, the length of time between the original test and the audit test period is shorter, and the specific program or application is more defined and likely to be stable. In addition, the decision to use benchmarking is more likely if the results of other tests are consistent and the consequences of failing to detect changes because of the reliance on benchmarking are less severe.
The benefit to the auditor of benchmarking is that the auditor’s testing is reduced. Instead of re-testing the program or application, the auditor needs to test only the lack of changes to the program or application.
The benefit to the auditor of benchmarking is that the auditor’s testing is reduced. Instead of re-testing the program or application, the auditor needs to test only the lack of changes to the program or application.