Zou's Fencing Controls Essay

1920 Words Nov 25th, 2014 8 Pages
Fall
15
Fall
15
Case II report
Shasha Chen Professor: Dr. Maureen Mascha Date: 11/09/2014

Case II report
Shasha Chen Professor: Dr. Maureen Mascha Date: 11/09/2014

08
Fall
08
Fall

1.
Auditors should always evaluate the design and test the operating effectiveness of a company’s internal control. The key procedures of the evaluation of design are fulfilled by inquires, observations, and inspections. The same procedures can be used to test the operating effectiveness as well.
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Specifically speaking, in ZOU’s case, auditors should obtain understandings over ZOU’s Warehouse K system, Budgetpro, and PeopleSoft.
Another aspect relevant to the information technology is the system-generated data and reports. If auditors choose a control that uses some information generated from the company’s internal IT system, the effectiveness of the control requires obtaining audit evidence of the accuracy and completeness of the internal information. In the ZOU’s case, when testing of the controls over risk #2, auditors use reports, which are automatically generated by the Warehouse K system. Auditors decide to further test the controls over accuracy and completeness. When testing the controls over risk #3, both monthly reporting package and budget information are somewhat generated internally by ZOU’s internal system. Depending on different systems, auditors decide to further test controls for accuracy and completeness with respect to the monthly reporting package, which is generated from PeopleSoft.
Roll-forward of controls considerations
Due to the fact that auditors perform the interim procedures over the operating effectiveness testing in all of the three risks, auditors are required by PCAOB to perform the roll-forward of controls. Depending on some factors, auditors should consider the nature, length and extent of the roll-forward procedures. A specific
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