Topic 10: Systems Issues Flashcards
Analytical Review
A process that involves analysing transactions in a database and identifying relationships.
Attest Service
An independent accountant expressing a written opinion about the reliability of a written assertion prepared by another party.
Audit
A systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating those results to interested users.
Audit Trail
A traditional method that auditors used to follow a paper ‘audit trail’ from source documents to final accounts and vice versa.
Australian auditing standards (ASAs)
ASAs establish requirements and provide explanatory guidance on the responsibilities of the auditor and the assurance practitioner, as appropriate, in audit and assurance engagements.
CAATs
The tools and techniques employed by auditors to extract and analyse client data.
Embedded Audit Software
Software written by or for the auditor and embedded into the client’s computer system.
Generalised Audit Software (GAS)
Software designed to read and process data, typically from large databases, to perform a wide range of audit tasks.
Generally Accepted Accounting Principles (GAAP)
Accepted conventions, rules and procedures that define accounting practice.
Inherent Risk
The potential for fraudulent activity or serious and material errors in financial statements.
Integrated Test Facility (ITF)
A simple version of embedded audit software that populates a client’s system with ‘dummy’ records.
Internal Control Questionnaire (ICQ)
A standard form used by an audit firm to evaluate internal control procedures comprising a checklist of questions for each business process.
Master Audit Program (MAP)
A standardised program that has a large number of ‘switches’ that may be set to customise the program for the particular client system.
Purpose of an Audit
To enhance the degree of confidence of intended users in the financial report. This is achieved by the expression of an opinion by the auditor on whether the financial report is prepared, in all material respects, in accordance with an applicable financial reporting framework.
Sarbanes–Oxley Act (SOX)
US legislation that requires generally higher standards of financial reporting. The Act is binding on subsidiaries of US companies. SOX applies to all public companies in the US and non-US companies issuing and registering securities in the US.
