AUD F2 - Quality & Internal Control, Engagement Acceptance, and Planning

Question 1

5 Components of Internal Control? And description?

Answer 1

CRIME

Control Environment -

Question 2

What are 3 Internal Control Limitations? or issues?

Answer 2

• Management override of internal controls
• Human error, which may include errors in the design or use of automated controls
• Collusion by two or more people by deliberate circumvention of controls

Question 3

5 Computer Assisted Audit Techniques (CAATs)

Answer 3

Transaction tagging - electronically mark “tag” specific transactions and follow them through the client system

Embedded Audit Modules - sections of application program code that collect transaction data. “capture specific data”

Parallel Simulation - auditor reprocesses the client’s data using the auditor’s own software

Test data - consists of using “dummy” data run through the client’s computer system but under auditors control.

Integrated Test Facility - allows fictitious and real transactions to be processed together. it uses test data commingled with actual data to test transactions.

Question 4

Why do auditors hesitate to use embedded audit modules?

Answer 4

• Auditors are required to be involved in the system design of the application to be monitored