8-15 8-18 8-21 8-24 8-26 8-27&8-28 between a system lowchart and a program flowc

Question

8-15 8-18 8-21 8-24 8-26 8-27&8-28

between a system lowchart and a program flowchart. 8-1 tion of a 14 List and detine three types of data tronsmission controls Describe brietly the controls that should be established over the t use by unauthorized personnel. What is meant by the term telecommunications? splain briefly what is meant by a distributed data processing system affect a bviety what is meant by electronic data interchange (EDI), How does Er Ex company's audit intil? ls it probable that the use of IT will eventually eliminate the audit trail, mak in the financial state 1 control over IT activities with a to trace individual transactions from their origin to the summary tota S-30, Do auditors usually begin their consideration of internal control over IT aci s-21. Descrihe the asdit tichnique known as togging and tracing. What is the purpose of the tesh s-22. A primary requirement of effective intermal control is a satisfactory plan of organi ments? Explain. review of general or application control activities? Explain ique Explain the characteristics of a satisfactory plan of organization for an information department, including the relationship between the department and the rest of the 8-23. Distinguish between batch processing and online real-time (OLRT) processing, I these systems is strong internal control over input most easily attained? Explain. Auditors encounter the use of user operated computers on almost every audit engage a. How do user operated computers differ from large computers? h. When are the auditors concerned with intemal control over the use of user operated 28-24. ment computens 8-25. The use of test data is one method of performing tests of processing controls in an IT-based system. Identify and discuss several other methods by which auditors may test internal 8-26. Discuss how generalized audit software can be used to aid the auditors in examining accounts 8-27. An integrated test facility (ITF) is a method used by both internal and external auditors for testing (CIA, adapted) 8-28. Many companies have part or all of their I'T processing done by computer service processing controls over IT activity receivable in a fully IT-based system. IT-based system controls. Discuss the advantages and disadvantages of implementing an ITE a. What controls should the company maintain to ensure the accuracy of processing d doee by a service center? h. How do auditors assess internal control over applications processed for an audit cient a service center? c. What is a service auditors' report on the processing of transactions by a service orga d. What two types of reports are provided by service auditors? e. How do user auditors use each type of report? nization

Explanation / Answer

QUESTION: 8-15:

Most users are interested in taking steps to prevent others from accessing their computer. Whether it be to protect yourself from malware or to ensure that your private information is safe, having a secure computer can definitely provide peace of mind. The following sections detail many ways you can secure your computer against others. To proceed, you may read through each section or choose one that interests you from the below list.

QUESTION: 8-18:

Electronic data interchange is an arrangement which links the computer systems of two trading partners to expedite sales/purchases. The buying company’s purchasing system creates and transmits a purchase order electronically in an agreed format, either directly or through a value-added network. The selling company receives the information, and it is converted electronically into a sales order.

The absence of paper documents in an EDI transaction disrupts the traditional audit trail. This can be compensated for through the use of transaction logs which can be reconciled.

QUESTION: 8-21

The tagging and tracing of transactions approach involves the selection of certain transactions as they are entered into the system and using software to follow these transactions throughout the various processing steps, each of which if normally printed. Unauthorized processing steps may be detected by reviewing the listing

QUESTION: 8-24

An operating system is one of the most important programs that run on a computer or server. It is referred to as the underlying software that helps in carrying out basic functions like running programs, managing resources, manipulating files, controlling the keyboard and screen, etc.

A single user operating system provides the facilities to be used on one computer by only one user. In other words, it supports one user at a time. However, it may support more than one profiles. Single keyboard and single monitor are used for the purpose of interaction. The most common of a single user operating system is a system that is found in a typical home computer.

b) Students need to ensure they have a complete understanding of the controls in a computer-based environment, how these impact on the auditor’s assessment of risk, and the subsequent audit procedures. These procedures will often involve the use of computer-assisted audit techniques (CAATs).

The aim of this article is to help students improve their understanding of this topic by giving practical illustrations of computer-based controls and computer-assisted techniques and the.

Relevant auditing standards
References will be made throughout this article to the most recent guidance in standards:

ISA 300 (Redrafted) Planning an Audit of Financial Statements

ISA 315 (Redrafted) Identifying and Assessing the Risks of Material Misstatement Through Understanding the Entity and Its Environment

ISA 330 (Redrafted) The Auditor’s Responses to Assessed Risks.

QUESTION 8-26:

If your company is subject to an annual audit, the auditors will review its accounts receivable in some detail. Accounts receivable is frequently the largest asset that a company has, so auditors tend to spend a considerable amount of time gaining assurance that the amount of the stated asset is reasonable.

Here are some of the accounts receivable audit procedures that they may follow:

QUESTION 8-27:

An integrated normal facility (ITF) creates a fictitious entity in a database to process normal transactions simultaneously with live input.

It can be used to incorporate normal transactions into a normal production run of a system. Its advantage is that periodic normaling does not require separate normal processes. However, careful planning is necessary, and normal data must be isolated from production data. Integrated normal facility is considered a useful audit tool during an IT audit because it uses the same programs to compare processing using independently calculated data. This involves setting up dummy entities on an application system and processing normal or production data against the entity as a means of verifying processing accuracy.

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