LA 8 Flashcards
Example of tool avail to IA during internal audit process
-WP
-Walk through tests
-Interviews and enquires
-System descriptions
- Flowcharts
-Sampling
Describe Working papers
-Recording of engagement info is documented on WPs
-they keep a record of all actions by the IA and document engagements obj, procedures, evidence and comms
What are the types of WP
- Current, annual or carry-forward WP files
- Permanent or Perpetual WP files
Discuss Current/Annual WP files
-They represent a set of WPs related to specific engagements performed during a current yr
-IAs can include anything the the current WP file but should avoid cluttering it w/ unnecessary docs
-Contents of current WP include
>Docs relating to planning of engagement
>Engagement work programme
>IC questionnaires, flowcharts, system descriptions etc
Discuss Permanent/Perpetual WP files
-They are relevant to more than one engagement and more general in nature
-They incl a description of major activities, products, locations and job descriptions for an engagement client
-They should be kept updated should changes occur
Characteristics of WP
-Each WP must have a heading which incl the name of the org/function/dept being subjected to the engagement
-Each Wp must be signed and dated by IA who prepared it
-Must contain a ref #
-Sources of data must be clearly identified in the WP
Define the walk-thru test
-A physical walk-thru following the logical flow of a transaction from beginning to end
-Gives IA an idea of how the process flows or how transaction happen
-IA should try to not disturb the trans/process in order to see how it actually flows/occurs
-The test prevents the IA from starting w/ an engagement and allocating too much time to the initial stages only to find out that a # of aspects still need to be investigated further
Discuss interviews and enquires
-used to gain info and evidence
-used mostly during planning and perfroming
-interview = more formal (asked during planning)
-enquires = not as formal (used throughout engagement)
Rules to consider when conducting interviews/enquires
-Be polite and accommodating when making an enquiry
-Ask open ended Q’s
-Respect employee’s normal takes = set appointments
Discuss the ICQ
-Used
>during planning to gain understanding of ICs regarding process being audited and used
>during performing to gather evidence
-Yes/No Q’s
>Yes = good IC exists
>No = absence of good IC
-Answers w/ Yes are then subject to further investigation
Discuss System descriptors
-Written descriptions of the business process/unit and incl the IC acts in the system beung investigated by IA
-Consider the following when competing SD
>Best descriptions are concise and factual
>Avoid lengthy descriptions
>Impersonal
-Used during planning and performing
Discuss Flowchart techniques
-Used during
>Planning: To gain understanding of IC system
>Performing: To gather evidence
-Its a visual display of client’s systems, processes or IC acts prepared by an IA
-Consider the following when drafting flowchart
>A standard set of symbols must be used
>Simpler = the better
>Charts should not be cramped
>Flowchart symbols must be explained
What is sampling
-A tool used by an IA to identify items to be audited
Statistical vs non-statistical sampling techniques
Statistical
-Use of mathematical measurement techniques to calculate formal statistical results and quantify sample risks
ADV
-Allows calc of sampling reliability
-Helps avoid over-auditing and under-auditing
-Enables IA to make objective statements abt sampled population
Non-stat
-reliance on the use of professional judgement to determine sample size and to evaluate results
-referred to as judgmental sampling
ADV
-Low cost
Steps in Sampling process
1: Determine engagement objective
2: Determine population
3: Determine sample unit
4:Determine sample size
5:Determine which items from sample size should be selected
6: Test the sample items
7: Evaluate results and draw a concl
