Module 16

Question 1

understanding and documentation of internal controls

Answer 1

requires overall understanding of entities internal control system

Question 2

test of control techniques

Answer 2

enquiries - low reliability
observation - medium reliability
inspection - high reliability
re-performance - high reliability

Question 3

walkthroughs

Answer 3

auditor selects one or more transactions and follows them through the system, from initiation to settlement and reporting
not a test of control

Question 4

process mining

Answer 4

allows clients process to be mapped where date is available
can be used in place of walkthrough

Question 5

control activities

Answer 5

policies and procedures management have put in place to ensure their directives are carried out

Question 6

key control

Answer 6

mitigates ROMM
auditor tends to rely on it
only selected if designed effectively

Question 7

effectiveness of key controls

Answer 7

testing how well it works in practice

Question 8

test of controls

Answer 8

preformed by auditor to determine whether controls operated as documented

Question 9

ROMM and detection risk

Answer 9

higher the ROMM the lower the detection risk and vice versa