IS 414 CH. 11 (VOCAB)

Question 1

Auditing

Answer 1

Is the systematic process of obtaining and evaluating evidence regarding assertions about economic actions and events in order to determine how well they correspond with established criteria.

Question 2

Internal auditing

Answer 2

Is an independent, objective assurance and consulting activity designed to add value and improve organizational effectiveness and efficiency, including assisted in the design and implementation of an AIS.

Question 3

Types of Internal Audits

Answer 3

Financial internal audits; 
Information systems or internal control audit; 
operational audit; 
compliance audit; 
investigative audit

Question 4

Financial audit

Answer 4

Examines the reliability and integrity of financial transactions, accounting records, and financial statements.

Question 5

Informational systems or internal control

Answer 5

Reviews the control of AIS to assess its compliance with internal control policies and procedures and its effectiveness in safeguarding assets. The audits usually evaluate system input and output; processing controls; backup and recovery plans; system security; and computer facilities

Question 6

Operational audit

Answer 6

Is concerned with the economical and efficient use of resources and accomplishment of established goals and objectives

Question 7

Compliance audit

Answer 7

Determines whether entities are complying with applicable laws, regulations, policies and procedures. The audits often results in recommendations to improve processes and controls used to ensure compliance with regulations

Question 8

Investigative audit

Answer 8

Examines incidents of possible fraud, misappropriation of assets, waste and abuse, or improper governmental activities.

Question 9

Inherent Risk

Answer 9

Susceptibility to significant control problems in the absence of internal control

Question 10

Control risk

Answer 10

Is the risk that a material misstatement will get through the internal control structure and into the financial statements.

Question 11

Detection risk

Answer 11

Is the risk that auditors and their audit procedures will fail to detect a material error or misstatement.

Question 12

Confirmation

Answer 12

Written communication with independent third parties to confirm the accuracy of information, such as customer account balances

Question 13

Reperformance

Answer 13

Performing calculations again to verify quantitative information

Question 14

Vouching

Answer 14

Comparing accounting journals and ledger entries with documentary evidence to verify that a transaction is valid, accurate, properly authorized, and correctly recorded

Question 15

Analytical Review

Answer 15

Examination of the relationships between different sets of data; abnormal or unusual relationships and trends are investigated.

Question 16

Materiality

Answer 16

Amount of an error, fraud, or omission that would affect the decision of a prudent user of financial information.

Question 17

Reasonable Assurance

Answer 17

Obtaining complete assurance tat information is correct is prohibitively expensive, so auditors accept a reasonable degree of risk that the audit conclusion is incorrect.

Question 18

Systems Review

Answer 18

An internal control evaluation step that determines if necessary control procedures are actually in place.

Question 19

Test of Controls

Answer 19

Tests to determine whether existing controls work as intended.

Question 20

Compensating Controls

Answer 20

Control procedures that compensate for the deficiency in other controls.

Question 21

Source Code Comparison

Answer 21

Program Software that compares the current version of a program with its source code; differences should have been properly authorized and correctly incorporated.

Question 22

Reprocessing

Answer 22

Using source code to reprocess data and comparing the output with the company’s output; discrepancies are investigated to see if unauthorized program changes were made

Question 23

Parallel Simulation

Answer 23

Using auditor-written software to process data and comparing the output with the company’s output; discrepancies are investigated to see if unauthorized program changes were made.

Question 24

Test Data Generator

Answer 24

Software that, based on program specifications, generates a set of data used to test program logic.

Question 25

Concurrent Audit Techniques

Answer 25

Software that continuously monitors a system as it processes live data and collects, evaluates, and reports information about system reliability.

Question 26

Embedded Audit Model

Answer 26

Program code segments that perform audit functions, report test results, and store the evidence collected for auditor review.

Question 27

Integrated Test Facility (ITF)

Answer 27

Inserting a dummy entity in a company’s system; processing test transactions to update them will not affect actual records.

Question 28

Snapshot Technique

Answer 28

Marking transactions with a special code, recording them and their master file records before and after processing, and storing the data to later verify that all processing steps were properly executed.

Question 29

Systems Control Audit Review File (SCARF)

Answer 29

Using embedded audit modules to continuously monitor transactions, collect data on transactions with special audit significance, and store the data to later identify and investigate questionable transactions.

Question 30

Audit Log

Answer 30

A file containing transactions that have audit significance.

Question 31

Audit Hooks

Answer 31

Audit routines that notify auditors of questionable transactions, often as the occur.

Question 32

Continuous and Intermittent Simulation (CIS)

Answer 32

Embedding an audit module in a DBMS that uses specified criteria to examine all transactions that update the database.

Question 33

Automated Flowcharting

Answer 33

Programs Software that interprets a program’s source code and generates a flowchart of the program’s logic.

Question 34

Automated Decision Table

Answer 34

Programs Software that interprets a program’s source code and generates a decision table of the program’s logic.

Question 35

Scanning Routine

Answer 35

Software that searches a program for the occurrence of specified items.

Question 36

Mapping Programs

Answer 36

Software that identifies unexcused program code.

Question 37

Program Tracking

Answer 37

Sequentially printing all executed program steps, intermingled with output, so a program’s execution sequence can be observed.

Question 38

Input Controls Matrix

Answer 38

A matrix that shows control procedures applied to each input record field; used to document the review of source data controls

Question 39

Computer-Assisted Audit Techniques (CAATs)

Answer 39

Audit software that uses auditor-supplied specifications to generate a program that performs audit functions.

Question 40

Generalized Audit Software (GAS)

Answer 40

Audit software that uses auditor-supplied specification to generate a program that performs audit functions.