Business Processes & Design of IT

Question 1

what is the audit process?

Answer 1

1. client acceptance/continuance
2. plan the audit (initial strategy and plan)
3. obtain understanding of client, its environment and internal controls:
   (leads to setting lower than maximum control risk)”
4. assess RMM ad design further procedures
5. perform tests of controls
6. perform substantive procedures
7. form an opinion
8. issue a report

Question 2

during the planning stage of the audit, what does the audit plan include?

Answer 2

-details of audit strategy
-nature, timing and extent of work
-procedures to comply with GAAS

Question 3

during the planning stage of the audit, what does obtaining an understanding of the client include?

Answer 3

initial understanding includes:
-determining if control is in place
-understanding design of control structure
-documenting auditor’s understanding
-understanding control environment

Question 4

what comprises an internal control walkthrough?

Answer 4

Reperformance of contols
Inquiry of personnel
Inspection of documents
Observation of operations

Question 5

what are 4 ways of documenting I/C?

Answer 5

Flowchart
Internal control questionnaire
Narrative
Decision table/tree

Question 6

what is a flowchart?

Answer 6

-illustrates data flows and interactions
-segregation of duties evident
-flow between departments not evident

Question 7

what is the internal control questionnaire?

Answer 7

-yes answer=potenital control
-challenge to create but easy to administer
-may no identify control deficiencies

Question 8

what is a narrative?

Answer 8

-easy to understand
-segregation of dutiies may not be evident
-cumbersome

Question 9

what is a decision table/tree?

Answer 9

-good for decision processes
-next step depends on last answer
-not appropriate for all controls

Question 10

under what condition do you accept the terms of engagement?

Answer 10

there are remedial procedures that can be performed for any scope limitations created by engagement timing

Question 11

under what condition do you reject the terms of engagement?

Answer 11

-there are no remedial procedures that can be performed for any scope limitations created by engagement timing
-client has imposed scope limitations
-audit would most likely result in a disclaimer of opinion