(A2)M7-M9 Flashcards
What are an entity’s 3 main objectives and which one is most relevant to the audit?
reliability of financial reporting (most relevant)
effectiveness and efficiency of operations
compliance with regs
During planning, auditor must obtain an understanding of which two elements of internal control?
design and implementation
The 5 components of internal control are…? “CRIME”
control activities risk assessment information and communication systems monitoring environment
Control environment includes…?
tone at top
commitment to competence
management philosophy and operating style
human resources
assignment of authority/responsibility
enforcement of integrity and ethical values
organizational structure
participation of those charged with governance
What is risk assessment (IC) and give examples of situations that increase risk
entity’s identification and analysis of risks to achievement of objectives
new tech, rapid expansion, new personnel, restructuring, new accounting principles, etc.
Internal auditors are part of which component of internal control?
Monitoring
What are the 8 control activities? “PAID TIPS”
pre numbered documents authorization of transactions independent checks documentation timely financial performance reviews info processing controls (app/general) physical controls segregation of duties PAID TIPS
What are some general controls? “CASA”
controls over network operations
system software acquisition
access security controls
application system acquisition
What are some application controls? “MAC”
administrative access rights
maintaining accounts and trial balances
checking accuracy of records
(apply to processing individual transactions)
What is the difference between test data approach and integrated test facility?
TD: off-line under auditor’s control
ITF: online, test data is commingled with live data, dummy accounts
