The use of computer facilities a small enterprise may increase the control risk, comment.

Auditing and Assurance Revision Questions and Answers

The statement in question is correct because of the limited segregation of duties and functions whereusers of computers may be able to perform two or more of the following functions in the accounting systems viz. initiating and authorizing source document; operating and entering data into the computer system, changing / modifying of programmes and data files as also operating systems using or distributing output. Thus, the principle that one man should not record a transaction independently is not followed since it is not cost effective. In such a situation it is quite reasonable to expect that the risk of not detecting errors may go up substantially. Under the circumstances, in case of a small entity the auditor may perform substantive tests in detail and takes large sample sizes.

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