AUD 2.9 - The Effect Of Information Technology On The Audit

Question 1

The automated means of originating, processing, storing, and communicating information:

Answer 1

Information technology

Question 2

The use of this effects the manner in which transactions are initiated, recorded, processed, and reported. It also effects the evaluation of internal control and the procedures used to gather evidence.

Answer 2

Information technology

Question 3

Are audit objectives the same in a computerized environment as they are in a manual environment?

Answer 3

YES

Question 4

What is different in a computerized IT environment than a manual environment?

Answer 4

Segregation of duties
Disappearing audit trail
Uniform transaction processing
Computer-initiated transactions
A potential for increased errors and irregularities
A potential for increased supervision and review
Dependence on IT general controls over computer processing

Question 5

Manual audit procedures are called:
Computer-assisted audit techniques (CAATS) are called:

Answer 5

Auditing around the computer
Auditing through the computer

Question 6

When doing this, the auditor does not directly test the application program but instead tests the input data, processes the data independently, and then compares the independently detained results to the program results.

Answer 6

Auditing around the computer (manual audit procedures)

Question 7

This has an emphasis n the input and output stages of transaction processing:

Answer 7

Auditing around the computer (manual audit procedures)

Question 8

Auditing around the computer (manual audit procedures) is appropriate for what type of systems?

Answer 8

Simple batch systems with a good audit trail

Risks of auditing around the computer include: insufficient, paper-based evidence and insufficient audit procedures

Question 9

This has an emphasis on the input and processing stages of transaction processing:

Answer 9

CAATS (auditing thru the computer)

Question 10

CAATS (auditing thru the computer) includes what techniques?

Answer 10

Transaction tagging
Embedded audit modules
Test data
Integrated test facility
Parallel simulation

Question 11

This technique allows the auditor to electronically mark specific transactions and follow them thru the clients system. This allowed to auditor to test both the computerized processing and the manual handling of transactions.

Answer 11

Transaction tagging

Question 12

Sections of the application program code that collect transaction data for the auditor. (For example the auditor might examine all transactions under an account greater than $500). It is built into the application program with the program is developed.

Answer 12

Embedded audit modules

Question 13

A technique that uses the application program to process a set data that results of which are already know. The clients system is used t process the auditors data offline while under the auditors control. Contains the types of invalid conditions the auditor is interested in (not all combinations of invalid conditions)

Answer 13

Test data

Question 14

Similar to the test data approach, except that the data is commingled with live data. The client system is used to process the auditors data while online. This is usually accomplished by processing the test data to dummy accounts. Client personnel are not informed that the test is being run.

Answer 14

Integrated test facility

Question 15

A technique in which the auditor reprocesses some or all of the clients live data (using the auditors software) and then compares the results with the clients files.

Answer 15

Parallel simulation

Question 16

With controlled processing, under the parallel simulation technique, the auditor observes what?

Answer 16

An actual processing run

Question 17

With controlled reprocessing, under the parallel simulation technique, the auditor observes what?

Answer 17

Uses an archived copy of the program and reprocesses the transactions

Question 18

This allows the auditor to perform tests of controls and substantive tests directly on the clients system

Answer 18

Generalized audit software packages (GASPs)

Question 19

What are advantages to using GASPs?

Answer 19

Test a much higher percentage of transaction
Require little technical knowledge
Significantly reduce audit time without sacrificing quality