WEEK 9: AUDITING Computer-based

Question 1

steps in audit process

Answer 1

1. audit planning ( inherent, control, detection )
2. collection of audit evidence ( observing reviewing etc.)
3. evaluation of evidence ( use credible analysis methods)
4. communication of results

Question 2

reasons for audit planning

Answer 2

To identify areas of risk ofmaterial misstatements

To design audit procedures (audit strategy) to address those risks and to obtain sufficient appropriate evidence

To help keep audit costs reasonable

To avoid misunderstandings with the client

Question 3

Auditing objectives

Answer 3

1. Ensure security provisions protect computer equipment, programs, communications, and data from unauthorized access, modification, or destruction.
2. Program development and acquisition are performed in accordance with management’s general and specific authorization.
3. Program modifications have management’s authorization and approval.
4. Processing of transactions, files, reports, and other computer records is accurate and complete.
5. Source data that are inaccurate or improperly authorized are identified and handled according to prescribed managerial policies.
6. Computer data files are accurate, complete, and confidential.

Question 4

what is the objective of risk based approach

Answer 4

ensures risk and opportunities are considered

Question 5

key components of risk based approach

Answer 5

1. identification and detection of risks
2. assessment and classification of risk ( significant/ insignificant)
3. designing and implementing further audit procedures to respond to these risks
4. issuing appropriate audit report in a manner to reduce the audit risk to acceptable level

Question 6

calculating audit risk

Answer 6

audit risk = IRCRDR

CR = Control risk 
IR= Inherent risk 
DR= Detection risk

Question 7

what is a compensating control?

Answer 7

control that is designed to satisfy the requirement for some other control deemed too difficult

Question 8

Are there lots of controls and stuff you need to read over in the slides for this section ?

Answer 8

yes :(((