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BPP PAR > Module 14 > Flashcards

Module 14 Flashcards

1
Q

Systems and controls analysis involves what following tasks?

A 
Understanding and documentation 
Walkthrough 
Evaluation of the design of controls 
Tests of controls 
Assessment of ROMM
Production of audit programmes in response to risk
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2
Q

Internal control system components?

A 
Control activities 
Risk assessment 
Information systems 
Monitoring of controls 
Environment of control
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3
Q

What is a walkthrough?

A

Where the auditor selects one or more transactions relating to specific systems and follows them through the system from initiation to settlement and reporting

NOT A TEST OF CONTROL

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4
Q

Approach to tests of control?

A

Identify key controls
Assess design
Test whether operates effectively

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5
Q

What is a key control?

A

A control that mitigates the ROMM and that the auditor intended to rely on

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6
Q

How will the auditor gain an understanding of the information systems?

A

Enquiries
Inspection
Observation

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7
Q

What is a test of controls?

A

Audit procedures performed by the auditor to determine whether the control activities operated as documented throughout the period under review

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8
Q

Test of controls can involve what?

A

Enquiring
Inspection
Observation
Reperformance

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9
Q

What are the reliability levels of test of controls?

A

Enquiry - low
Observation - medium
Inspection - high
Reperformance - high

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10
Q

A well written test of control should contain what?

A

A testing technique (e,o,i,r)
The control activity being tested
What is being checked

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11
Q

Testing stock counts, if performed at end of year the auditor can?

A

Confirm integrity of controls
Perform tests of controls over stock count
Perform substantive procedures over completeness and existence

Reperformance to ensure correctly counting

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12
Q

What are the two types of test count?

A

Floor to sheet

Sheet to floor

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13
Q

Evaluation of results?

A

All errors must be investigated, the value of the error is not important

If error found it may be that the error can be localised to a period
Localised: operate effectively for year except period

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14
Q

Controls reliance

A

Controls reliance - control risk is low

No controls reliance - control risk is high

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15
Q

At the end of the systems and controls analysis stage of the audit the auditor must be able to conclude on inherent risk and control risk- that is?

A

ROMM

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16
Q

What is high detection risk?

A

Auditor concluded that ROMM is low so willing to accept higher risk of not finding material misstatement in the F/S

17
Q

What is low detection risk?

A

Auditor concluded that ROMM is high so will only accept a low risk of not finding material misstatements

18
Q

Once the detection of risk has been established

A

The audit work programme can be designed for substantive testing

BPP PAR (20 decks)

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