Which statement regarding a continuous audit is incorrect?
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Answer: C. It is needed when the organization has a good internal control system
Explanation
A continuous audit is generally unnecessary and inefficient when an organization maintains robust internal controls. Strong internal controls already provide reliable error detection, making continuous auditing redundant and costly. Organizations with weak controls benefit from continuous auditing to catch discrepancies early. A continuous audit involves detailed examination of financial records throughout the entire fiscal year. Internal control systems are established by management to safeguard assets and ensure accurate records. External auditors evaluate internal controls before deciding whether continuous auditing is warranted.
Implementing continuous auditing requires significant technological infrastructure and specialized financial personnel. Businesses balance the cost of continuous auditing against the perceived risk of financial fraud. Robust internal controls reduce the need for constant external oversight during normal operations. It is conducted at regular intervals is a true characteristic of scheduled continuous auditing. It may be carried out on a daily basis is accurate for highly automated financial systems. It is expensive correctly describes the high operational cost of maintaining continuous auditing processes.
- Subject
- Accounting and Finance
- Category
- Auditing
- Topic
- —
- Difficulty
- medium
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