Observation is considered a reliable audit procedure but one that is limited in usefulness. However, it is used in a number of different audit situations. Which of the following statements is true regarding observation as an audit technique?
a. It is the most effective audit methodology to use in filling out internal control questionnaires
b. It is the most persuasive methodology to learn how transactions are really processed during the period under audit
c. It is most persuasive about the performance of a process but is limited to the moment in time at which the observation takes place
d. It is the most persuasive audit technique for determining if fraud has occurred
Ans: c. It is most persuasive about the performance of a process but is limited to the moment in time at which the observation takes place
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