ExpertHard1 markMultiple Choice
CPA · Question 13 · Area III: SOC Engagements
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?
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:
A.
The control is operating effectively because 96% compliance is acceptable.
B.
The control is operating effectively if the HR manager signs an affidavit.
C.
The control is not operating effectively.
D.
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.'
Full Answer
C.The control is not operating effectively.✓ Correct
The control is not operating effectively.
In an audit, a missing sample item is treated as a deviation/failure. The auditor cannot verify the control operated for that instance.
Common mistakes
Thinking 1 error is acceptable or that replacing the sample is allowed.
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