Chapter 6

Question 1

What is the purpose of audit documentation?

Answer 1

Audit documentation serves mainly to provide: 1) the principal support for the auditor’s report; 2) assistance in the planning, conduct, and supervision of the audit; 3) accountability; and 4) useful information.

Question 2

What is a major benefit of computer processing over manual processing?

Answer 2

Computer processing virtually eliminates the occurrence of (random) computational errors normally associated with manual processing.

Question 3

What are the two requirements 1crucial to achieving audit efficiency and effectiveness with a computer?

Answer 3

1. Identification of the appropriate audit tasks and; 2. Appropriate software to perform the selected audit tasks.

Question 4

What is parallel simulation?

Answer 4

Parallel simulation is a technique in which the auditor reprocesses the client’s data using the auditor’s own software. The auditor then compares his or her results to those obtained by the client.

Question 5

What is one of the primary benefits of using generalized audit software?

Answer 5

The ability to access client data stored in computer files without having a detailed understanding of the client’s hardware and software features.

Question 6

What is an integrated test facility?

Answer 6

A computer-assisted auditing technique that allows fictitious and real transactions to be processed together without client operating personnel being aware of the testing process.

Question 7

What are the factors considered in planning an audit engagement’s personnel requirements?

Answer 7

When assigning personnel to an engagement, the firm should consider the following factors in achieving a balance of engagement manpower requirements, personnel skills, and individual development and utilization: 1) engagement size and complexity, 2) personnel availability, 3) special expertise required, 4) timing of the work to be performed, 5) continuity and periodic rotation of personnel, and 6) opportunities for on-the-job training.

Question 8

What are the six interrelated elements of quality control?

Answer 8

HELPME; The six interrelated elements of quality control are: human resources, engagement/client acceptance and continuance, leadership responsibilities, performance of the engagement, monitoring, and ethical requirements.

Question 9

What does a system of quality control establish?

Answer 9

A system of quality control establishes policies and procedures that provide reasonable assurance of conforming with professional standards.