MODULE 16

Question 1

How will an Auditor perform a systems and controls review?

Answer 1

1. Understand and Document components of internal Controls
2. Understand and document information systems
3. Perform a walkthrough
4. Identify key Controls, assess them, test them and evaluate the results
5. Assess ROMM
6. Produce Audit Work Programme

Question 2

How can the Auditor gain an understanding of the Information systems?

Answer 2

1. Enquire with the entity’s employees
2. Inspect the entity’s procedural and systems manuals
3. Observe the system in operation
4. Inspect prior years audit file

Question 3

What are walkthroughs? Give an example

Answer 3

Where the auditor selects one or more transactions relating to a specific system and follow them through the system from start to finish e.g the purchase systems.A

Question 4

Explain the process to determining whether the control activity can be relied upon:

Answer 4

1. Identify Key controls - E.g: a control that mitigates the ROMM and the auditor intends to rely on— Checking whether a specific CCTV camera can be relied upon
2. Assess the design of the key control - I.e The Auditor will check whether the control designs will allow the control to mitigate the risk— checking if the CCTV camera is aimed at the right part where the manager wants to protect
3. Test whether.the key controls operate effectively - check if the CCTV records the whole day

Question 5

What is the definition for test Of controls?

Answer 5

An Audit Procedure performed by the auditor to determine whether the control activities operate as documented throughout the period under review

Question 6

What are the techniques for Test Of Controls?

Answer 6

1. Enquiring- asking staff
2. Inspecting- document
3. Observing- watching control activities being performed
4. Re-performance