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Internal Audit Practice > Fieldwork And Testing > Flashcards

Fieldwork And Testing Flashcards

0
Q

The purpose of discussing and observing monitoring controls is to determine that they are…

A
  1. Designed to achieve objectives

2. Working as designed

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1
Q

What are the five key stages of the engagement process?

A
  1. Discussion and observation of monitoring controls.
  2. Verification of evidence.
  3. Documenting results of audit work.
  4. Assessing management’s evaluation of residual risks.
  5. Conclusions on responses covered by assignment.
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2
Q

What processes might be used in verifying evidence?

A
  1. Documentary analysis
  2. Interview
  3. Observation
  4. Calculation and analysis
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3
Q

When documenting audit results under RBIA, links between what should be made clear?

A

Risks
Responses
Assurances
Work done

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4
Q

What does IA conclude on when assessing m’ment’s evaluation of residual risks?

A

Specific risk scores in the risk register

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5
Q

How should IA proceed if systemic risk management failings are identified during the audit?

A

Should include in organisational level conclusions on risk maturity

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6
Q

On what two aspects of risk responses should IA conclude?

A 
Design
Effectiveness (working as designed)
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7
Q

In RBIA, audit conclusions should be linked to…

A

Risks that are managed by responses tested

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8
Q

What are the two general forms of audit testing?

A

Substantive testing

Compliance testing

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9
Q

… tests involve detailed tests of transactions or account balances

A

Substantive

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10
Q

Substantive tests are detailed tests of t… or a… b…

A

Transactions or account balances

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11
Q

True or false: substantive tests test control activities

A

False

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12
Q

Substantive tests are generally used when c… e… is weak

A

Control evaluation

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13
Q

A characteristic of substantive tests is that the samples are…

A

Much larger

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14
Q

Compliance tests establish whether…

A

Controls are being applied as prescribed

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15
Q

Compliance tests test whether the result of the control is…

A

Achieved as intended

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16
Q

Compliance tests test whether the control is o…

A

Operating

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17
Q

If controls are assessed as inadequate, what kind of testing should be used?

A

Substantive testing

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18
Q

Compliance tests tell the auditor more about the o… of the s… than substantive tests

A

Operation of the system

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19
Q

True or false: substantive tests give some level of assurance about achievement of future objectives

A

False

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20
Q

Name four specific types of testing technique

A

Documentary analysis
Interviewing
Observation
Calculation and analysis

21
Q

Give some examples of documentary analysis

A

Review of bank recs to ensure carried out
Examination of payments to ensure authorised
Examination of personnel files to ensure references taken up

22
Q

Give some examples of the use of interviewing

A

Interviewing payments staff to establish whether password disclosure procedures are known
Interviewing warehouse staff to establish nature of checks on goods received

23
Q

Give examples of the use of observation

A

Observing environmental conditions in a temperature controlled area
Observation of security checks on entry to premises

24
Q

In analytical review, the auditor establishes a b… for a relationship then checks to see if it exists

A

Benchmark

25
Q

In analytical review, the auditor establishes a benchmark for a relationship, then…

A

Checks to see if it exists

26
Q

Describe analytical review

A

In analytical review, the auditor establishes a benchmark for a relationship, then checks to see if it exists

27
Q

Give three reasons why analytical review is a useful technique

A
  1. Flexible - can be used in many different ways
  2. Quick and easy to do - especially in computerised environment
  3. Cost effective method of substantive testing
28
Q

What are the two techniques of analytical review?

A
  1. Trend analysis

2. Ratio analysis

29
Q

Trend analysis compares…

A

Data over periods of time

30
Q

Ratio analysis compares…

A

Size of one thing to another

31
Q

The engagement testing programme is developed from the…

A

Risk matrix

32
Q

The testing program should link back to…

A

Individual risks

33
Q

What will the testing programme cover?

A
  1. How much testing to undertake
  2. What types and techniques of testing
  3. What periods tests will cover
  4. What sampling types and sizes to be used
34
Q

How will strong risk mitigation in an audit area affect testing?

A

Less testing and most testing will be compliance testing.

35
Q

Substantive testing may be required when the auditor needs to q… errors and exceptions

A

Quantify

36
Q

Substantive testing may be required when compliance tests reveal…

A

Weakness in control

37
Q

Substantive testing may be required when management have…

A

Expressed concern about part of their activity

38
Q

When considering the evidence required, the auditor needs to understand what l… of a… is acceptable and how much evidence this will require

A

Level of assurance

39
Q

If audit evidence is not provided in the time available, how should IA proceed?

A

Reduce level of assurance

OR

Increase audit time

40
Q

What two things determine the choice of evidence techniques?

A
  1. Nature of the activity

2. Evidence requirements

41
Q

E… available may determine how detailed testing will be

A

Expertise

42
Q

Expertise available may determine how d… testing will be

A

Detailed

43
Q

If evidence is not available, the level of … should be adjusted

A

Assurance

44
Q

What five things affect the cost of the audit activity?

A
  1. How much testing done
  2. How many auditors involved
  3. Type of tests
  4. Locations visited
  5. Number of visits
45
Q

If cost is likely to impact on the scope of the engagement, how should management be informed?

A

Via terms of reference

46
Q

What are the three main reasons sampling is used?

A
  1. Gives level of assurance required in almost all cases
  2. Best use of audit resources
  3. 100% testing does not necessarily give 100% assurance
47
Q

What are the two general methods of sample selection?

A
  1. Judgmental sampling

2. Statistical sampling

48
Q

Which method of sampling is used most often: judgmental or statistical sampling?

A

Judgmental sampling

49
Q

In judgmental sampling, auditors use k… and experience to determine what transactions to sample

A

Knowledge

50
Q

In judgmental sampling, auditors use knowledge and e… to determine what transactions to sample

A

Experience

51
Q

When is judgmental sampling suitable?

A
  1. When it will satisfy evidence requirements
  2. Auditors familiar enough with audit area
  3. Samples need to include items prone to fraud, etc
  4. No need to extend results of sample to whole population
  5. Statistical sampling not practical

Internal Audit Practice (2 decks)

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