Chapter 9 ACC 444

30 terms by Yosette 

Create a new folder

Advertisement Upgrade to remove ads

Auditing

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 the results to interested users.

Financial Audit

Examines the reliability and integrity of accounting records (both financial and operating information) and correlates with the first of the five scope standards.

Information Systems or Internal Control Audit

Reviews the controls of an AIS to assess its compliance with internal control policies and procedures and its effectiveness in safeguarding assets its scope roughly corresponds to the IIA's Second and third standards

Operational or Management Audit

Is concerned with the economical and efficient use of resources and the accomplishment of established goals and objectives. Its scope corresponds to the fourth and fifth standards.

Inherent Risk

Is the susceptibility to material risk in the absence of controls. Example a system that employs online processing, networks, database software, telecommunications and other forms of advanced technology has more inherent risk than a batch processing system.

Control Risk

Is the risk that a material misstatement will get through the internal control structure and into the financial statements. A company with weak internal controls has a higher control risk than one with strong controls. Can be determined by reviewing the control environment, testing internal controls and considering control weaknesses identified in prior audits and evaluating how they have been rectified.

Detection Risk

Is the risk that auditors and their audit procedures will not detect a material error or misstatement.

Materiality

What is and is not important in a given set of circumstances, is primarily a matter of judgment

Reasonable Assurance

No material error exists in the information or process audited

Systems Review

Evaluating the control procedures reviewing system documentation and interviewing appropriate personnel to determine if the necessary procedures are in place

Test of Controls

Are conducted to determine if the procedures are satisfactorily followed. Examples are tests such as observing system operations, inspecting documents, records, and reports, checking samples of system inputs and outputs and tracing transactions through the system.

Compensating Controls

Procedure that compensate for the control deficiency

Reprocessing

Uses verified copy of source code to detect changes in programs. The auditor uses the program to preprocess data and compare that output with the company's output.

Parallel Simulation

Auditor writes a program instead of saving a verified copy of the source code.

Concurrent Audit Techniques

To continually monitor the system and collect audit evidence while live data are processed during regular operating hours.

Embedded Audit Modules

Segments of program code that perform audit functions

Integrated Test Facility

Technique places a small set of fictitious records in the master file

Snapshot Technique

Examines the way transactions are processing . Selected transactions are marked with a special code that triggers the snapshot process audit modules in the program record these transactions and their master file records before and after processing

System Control Audit Review File (SCARF)

Uses embedded audit modules to continuously monitor transaction activity and collect data on transaction with special audit significance

Audit Log

Data recorded in SCARF file including those transactions exceeding a specified dollar limit, involving inactive accounts, deviating from company policy, or containing write-downs of asset values.

Audit Hooks

Are audit routines that flag suspicious transactions. Example internal auditors at State Farm Insurance determined that their policyholder system was vulnerable to fraud every time a policy holder changed his or her name or address and subsequently withdrew funds from the policy. It designed audit hooks to tag records with a name or address change.

Real-Time Notification

When audit hooks are used, auditors can be inform of questionable transactions as they occur.

Continuous and Intermittent Simulation (CIS)

Embeds an audit module in a database mgt. system (DBMS) . Examines all transactions that update the database using criteria similar to those of SCARF.

Automated Flowcharting Programs

Interpret program source code and generate a corresponding program flowchart

Automated Decision Table Programs

Generate a decision table representing the program logic

Scanning Routines

Search a program for occurrences of a specified variable name or other character combination

Mapping Programs

Identify unexecuted program code. This software could have uncovered the program code that an unscrupulous programmer inserted to erase all computer files when he was terminated

Program Tracing

Sequentially prints all application program steps executed during a program run. List is intermingled with regular output so auditors can observe the precise sequence of events that unfold during the program execution.

Input Controls Matrix

Document the review of source data controls. The matrix shows the control procedures applied to each field of an input record

Computer Audit Service (CAS) or Generalized Audit Software (GAS)

Number of computer programs have been written especially y for auditors the most popular are audit control language (ACL) and IDEA

Please allow access to your computer’s microphone to use Voice Recording.

Having trouble? Click here for help.

We can’t access your microphone!

Click the icon above to update your browser permissions above and try again

Example:

Reload the page to try again!

Reload

Press Cmd-0 to reset your zoom

Press Ctrl-0 to reset your zoom

It looks like your browser might be zoomed in or out. Your browser needs to be zoomed to a normal size to record audio.

Please upgrade Flash or install Chrome
to use Voice Recording.

For more help, see our troubleshooting page.

Your microphone is muted

For help fixing this issue, see this FAQ.

Star this term

You can study starred terms together

NEW! Voice Recording

Create Set