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An auditor identifies that a control implemented in the ERP fires only when an exception report is reviewed daily by the financial controller. To rely on this control, the auditor MUST also test:
AThe independent review (i.e. the manual review step that consumes the report)
BThe hardware uptime of the ERP server
CThe encryption strength of database backups
DThe vendor contract with the ERP provider
Answer & Solution
Correct answer: A. The independent review (i.e. the manual review step that consumes the report)
1. This is an "IT dependent control" - its effectiveness hinges on the manual review step.
2. The auditor must test that the daily review actually occurred and exceptions were resolved.
3. Hardware uptime and contracts do not establish operating effectiveness of the control.
_Source: ICAI BoS CA Final Paper 3, Ch 4 "Special Aspects of Auditing in an Automated Environment"_
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