Which of the following audit techniques is MOST appropriate for verifying application program controls?
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A. B. C. D.D.
Out of the given options, the audit technique that is MOST appropriate for verifying application program controls is B. Code review.
Explanation: Application program controls are the controls that are embedded within the application software to ensure the completeness, accuracy, validity, and security of data processed by the application. These controls can be preventive, detective, or corrective in nature. The audit of application program controls is an important part of an IT audit.
Let's discuss each option one by one:
A. Statistical sampling: Statistical sampling is a technique used to select a representative sample of data from a population and draw conclusions about the entire population based on the analysis of the sample. While statistical sampling can be used to test application program controls, it is not the MOST appropriate technique for verifying these controls. Statistical sampling is generally used to test the effectiveness of general IT controls.
B. Code review: Code review is a manual process of examining the source code of an application to identify errors, vulnerabilities, and weaknesses in the code. This technique involves a detailed analysis of the code structure, logic, and algorithms used in the application. Code review is considered to be the MOST appropriate technique for verifying application program controls since it allows the auditor to identify the specific code segments that implement the controls and assess their effectiveness.
C. Confirmation of accounts: Confirmation of accounts is a technique used to verify the accuracy of financial data by obtaining written confirmation from external parties such as customers, vendors, or banks. This technique is not relevant for verifying application program controls since it does not provide any information about the controls embedded within the application.
D. Use of test data: The use of test data involves the creation of test scenarios and data to evaluate the performance and functionality of an application. This technique is useful for testing the overall functionality of the application but may not be appropriate for verifying application program controls since it does not focus specifically on the controls themselves.
In conclusion, code review is the MOST appropriate technique for verifying application program controls, as it allows the auditor to examine the specific code segments that implement the controls and assess their effectiveness.