An auditor is testing a control that states: 'All new employees must undergo background checks.' The auditor selects a sample of 25 new hires. 24 have documented background checks, but 1 file is missing the documentation. The HR manager states the check was done but the file was lost. What is the appropriate conclusion?

Answer options:

The control is operating effectively because 96% compliance is acceptable.

The control is operating effectively if the HR manager signs an affidavit.

The control is not operating effectively.

The auditor should replace the missing item with a new sample item.

How to approach this question

Apply the principle: 'If it isn't documented, it didn't happen.'

C.The control is not operating effectively.✓ Correct

In an audit, a missing sample item is treated as a deviation/failure. The auditor cannot verify the control operated for that instance.

Thinking 1 error is acceptable or that replacing the sample is allowed.

82 questions · hints · full answers · grading