MCQ AUD 3.9 Flashcards
The auditor should document key element of internal control
CRIME
The use of budgets and forecasts
improves supervise activities
Test of control is Inquiry,inspection, reperformace, observance
analytical procedures are form of substantive testing and final review. they are not useful in assessing control risk. confirmation verification are form of substantive testing
Internal control
Review of descriptions
If the question asks for assessing the objectivity of internal auditor
then look for an answer which says determine to the organizational level
When can audit cannot be completed
When there is an issue in integrity of management
Account balances
need not have test of control or tests of transactions applied to it
Most observanc
Observation of client personnal
Auditablity
Adequacy of accounting records.
It should raise a red flag
If the entity has large payments CHeck bearer purchase cashiers check transfer funds to numbered
The auditor should obtain knowledge of a clients information and communication system
to understand how transactions are initiated, processed and reported, the financial reporting process and the means used by the an entity to communicate financial roles and responsibilities
There are two types of report on the processing of transactions by service organizations
Reports on control placed in operation and tests of operating effectiveness. The former do not include test of operating effectiveness and therefore not intended to provide the user auditor with a basis for reducing the assessment of control risk. Accordingly such reports should include a disclaimer
Engagement letter and representation letter
engagement letter beginning representation letter end
competence of internal auditors
competence is reflected by internal auditors education, professional certification,experience, performance evalutions, audit plan, audit procedures, and the quality of audit documentation
