The Most Reliable Audit Technique for Testing Segregation of Duties | CISA Exam

A.

Segregation of duties is a critical component of internal controls in an organization. It is essential to ensure that no single individual or department has the ability to perpetrate and conceal fraudulent activities. When testing segregation of duties, auditors must employ audit techniques that provide the most reliable evidence.

Out of the four audit techniques provided in the question, observing daily operations for the area in scope provides the most reliable evidence for testing segregation of duties. Observing daily operations is a direct and objective audit technique that allows the auditor to see the segregation of duties controls in action.

By observing daily operations, auditors can ascertain whether the control activities are being executed effectively and whether there are any gaps or weaknesses in the control structure. This technique provides reliable evidence as it enables the auditor to assess the actual working of controls instead of relying on procedures and manuals that may not always be followed.

Evaluating the department structure via the organizational chart is a useful audit technique, but it may not provide the most reliable evidence. While an organizational chart may show the segregation of duties, it does not necessarily mean that the controls are working effectively.

Reviewing departmental procedure handbooks is another audit technique that may provide useful information but may not necessarily provide the most reliable evidence. Procedures in handbooks may not always be followed, and employees may have found workarounds to bypass controls.

Interviewing managers and end-users is a useful audit technique to gain insights into how controls are working in practice. However, interviews can be subjective, and the information obtained may be influenced by the interviewee's perception.

In conclusion, observing daily operations for the area in scope provides the most reliable evidence for testing segregation of duties. Auditors should employ multiple audit techniques to gather sufficient evidence to form a conclusion on the effectiveness of segregation of duties controls.