A2

Question 1

What is test data

Answer 1

client’s application program is used to process a set of test data, results are known by auditor (so goal is to generate same results)

Question 2

What are the two requirements crucial to achieving audit efficiency and effectiveness with a computer?

Answer 2

1. ID of the appropriate audit tasks
2. Appropriate software to perform the selected audit tasks

Question 3

What is an embedded audit module?

Answer 3

Sections of the application program code that collect transaction data for the auditor, built into the application program when program is developed

Question 4

Define the technique approach of the integrated test facility

Answer 4

Test transactions the “live” system and posts to dummy files to provide auditor with information about the operating effectiveness of controls. - client is not aware

Question 5

What is parallel simulation

Answer 5

Auditor reprocesses the client’s data using the auditor’s own software - then auditor compares their results to those obtained by client

Question 6

What are the primary objectives for obtaining an understanding of internal control in a financial statement audit?

Answer 6

1. ID types of potential material misstatements
2. Consider factors that affect the risk of material misstatements
   3.Design effective substantive tests

Question 7

What are the 6 quality control elements? (HELP ME)

Answer 7

1. Human resources
2. Engagement/client acceptance and continuance
3. Leadership responsibilities
4. Performance of engagement
5. Monitoring
6. Ethical requirements

Question 8

What is monitoring?

Answer 8

Process of assessing the quality of internal control performance over time and taking necessary corrective actions

Question 9

How does the work of an internal auditor impact the work of independent auditor?

Answer 9

Effect the NET
1. procedures in understanding IC
2. Assessing risk
3. Performing substantive procedures