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Audit CPA Exam| Questions with 100% Verified Answers
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Audit CPA Exam| Questions with 100% Verified Answers
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Audit CPA Exam| Questions with100% Verified Answers
The following would raise concerns regarding management philosophy and
operating style: - ✔ ✔ Management consumed with meeting the budget (pressure)
Management dominated by one person (opportunity -mgmt override)
Management compensation contingent upon the entitys financial
performance (bonus & stock - rationale)
Information processing controls: general vs application controls - ✔ ✔
General controls apply to information processing throughout the company
Application controls apply to information processing throughout the company
Need to document auditor understanding of
internal, ways to do that are... - ✔ ✔ FIND
Flowcharts
Internal control questionnaires - used for each assertion of management
,Narratives - harder to see weaknesses
Documentation from the client - procedures manuals and related controls
Types of flowcharts - ✔ ✔ System flowchart - shows the origin of each document
in the system, its subsequent processing and its final disposition
Program flowchart - IT flowcharts are initially created to document the logic
and existing flow of a computer diagram
Manual and automated controls - ✔ ✔ manual controls are performed by
people and are more suitable when judgement and discretion are required - also
used to monitor automated controls
automated controls - more suitable for high volume or recurring transactions
As planned level of reliance on the operating effectiveness of a control increases
the auditor should - ✔ ✔ obtain more reliable or more extensive audit evidence
AEIOU
Extent of substantive procedures - ✔ ✔ The overall risks of material
misstatement: the greater this risk, the lower risk we can accept for detection
risk, and the greater extent of substantive procedures
,control risk: if controls are operating effectively, the extent of substantive
procedures may be reduced
extent generally refers to sample size
IT Benefits - ✔ ✔ Ability to process large volumes of transactions and
data accurately and consistently
Improved timeliness and availability of information
facilitation of data analysis
reduction in the risk that controls will be circumvented
enhanced segregation of duties through effective implementation for security
controls
enhanced ability to monitor performance of the activities and its policies and
procedures
Segregate these duties in an IT system (COPAL) - ✔ ✔ Control group
Operators
Programmers
, Analyst (System)
Librarians
IT Risks - ✔ ✔ Potential reliance on inaccurate systems
Unauthorized access to data
Unauthorized changes to data
failure to make required changes or updates
inappropriate manual intervention
potential loss of data - not saving or storing properly
Pre-acceptance phase of engagement should consider these - ✔ ✔ Firms ability
to meet reporting deadlines
Firms ability to staff the engagement
Independence
Integrity of client management
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