The CARE Corporation uses an IBM mainframe computer system with peripheral optical reader and high-speed laser printer equipment. Transaction information is initially recorded on paper documents and then read by optical equipment that produces a magnetic disk containing the data. These data file disks are processed by a computer program, and printed listings, journals, and general ledger balances are produced on the high-speed printer equipment. Required: How the audit standard requiring “adequate technical training and proficiency” is complied with the audit of CARE Corporation’s financial statements.

The CARE Corporation uses an IBM mainframe computer system with peripheral optical reader and high-speed laser printer equipment. Transaction information is initially recorded on paper documents and then read by optical equipment that produces a magnetic disk containing the data. These data file disks are processed by a computer program, and printed listings, journals, and general ledger balances are produced on the high-speed printer equipment. Required: How the audit standard requiring “adequate technical training and proficiency” is complied with the audit of CARE Corporation’s financial statements.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter6: Audit Evidence

Section: Chapter Questions

Problem 7CYBK

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The CARE Corporation uses an IBM mainframe computer system with peripheral optical reader and high-speed laser printer equipment. Transaction information is initially recorded on paper documents and then read by optical equipment that produces a magnetic disk containing the data. These data file disks are processed by a computer program, and printed listings, journals, and general ledger balances are produced on the high-speed printer equipment. Required: Explain how the audit standard requiring “adequate technical training and proficiency” is complied with the audit of CARE Corporation’s financial statements.
Case 1: The CARE Corporation uses an IBM mainframe computer system with peripheral optical reader and high-speed laser printer equipment. Transaction information is initially recorded on paper documents and then read by optical equipment that produces a magnetic disk containing the data. These data file disks are processed by a computer program, and printed listings, journals, and general ledger balances are produced on the high-speed printer equipment. Required: Explain how the audit standard requiring “adequate technical training and proficiency” is complied with the audit of CARE Corporation’s financial statements.
In reviewing the processes, procedures, and internal controls of one of your audit clients, VeronicaCorporation, you notice the following practices in place. Veronica has recently installed a new electronicdata processing (EDP) system that affects the accounts receivable, billing, and shipping records. Thecompany identified a computer operator who is permanently assigned to each of the functions ofaccounts receivable, billing, and shipping. Each of these computer operators is given the responsibilityof running the program for transaction processing, making program changes, and reconciling thecomputer log. To prevent an operator from having exclusive access to the tapes and documentation,the computer operators randomly rotate the custody and control tasks every two (2) weeks over themagnetic tapes and the system documentation. Access controls to the computer room consist ofmagnetic cards and a digital code for each operator. Moreover, the system analyst and the computeroperation…
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In reviewing the process procedures and internal controls of one of your audit clients, Steeplechase Enterprises, you notice the following practices in place.Steeplechase has recently installed a new computer system that affects the accounts receivable, billing, and shipping records. A specifically identified computer operator has been permanently assigned to each of the functions of accounts receivable, billing, and shipping.Each of these computer operators is assigned the responsibility of running the program for transaction processing, making program changes, and reconciling the computer log. To prevent any single operator from having exclusive access to the tapes and documentation, these three computer operators randomly rotate the custody and control tasks every 2 weeks over the magnetic tapes and the system documentation. Access controls to the computer room consist of magnetic cards and a digital code for each operator. Access to the computer room is not allowed to either the…
A primary advantage of using CAATs in the audit of an advanced computerized system is that it enables the auditor toa. Substantiate the accuracy of data through self-checking digits and hash totals.b. Utilize the speed and accuracy of the computer.c. Verify the performance of machine operations that leave visible evidence of the occurrence.d. Gather and store large amounts of supportive audit evidence in machine-readable form.
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You are an independent auditor attending an engagement interview with the client. The client’s organization has recently implemented a data warehouse. Management is concerned that the audit tests that you perform will disrupt operations and suggests that instead of running tests against the live operational database, you draw the data for your analytical reviews and substantive tests of details from the data warehouse. Management points out that operational data are copied weekly into the warehouse and everything you need will be contained there. This will enable you to perform your tests without disrupting routine operations. You agree to give this some thought and get back to the client with your answer. Required Draft a memo to the client outlining your response to their proposal. Mention any concerns you might have.
An IT auditor is performing a test of the company's user access administration process, and has selected a random sample of 25 user access requests to evaluate. The IT audit test procedures revealed that 1 of the 25 sampled user access requests has not been properly authorized according to company policy. As a key next step in the IT audit process, the IT auditor should (select the BEST response): a) Communicate this concern to the Chief Executive Officer as soon as possible. b) Communicate this concern to the Audit Committee as soon as possible. c) Disregard the finding entirely. d) Perform additional audit procedures to better understand the risks related to the issue, as well as the root cause of the problem.
The Balcar Company’s auditors are developing an audit plan to review the company’s systems development procedures. Their audit objectives are to ensure that 1. the system was judged necessary and justified at various checkpoints throughout the SDLC.2. systems development activities are applied consistently and in accordance with management’s policies to all systems development projects.3. the system as originally implemented was free from material errors and fraud.4. system documentation is sufficiently accurate and complete to facilitate audit and maintenance activities.The following six controllable activities have been identified as sources of audit evidence for meeting these objectives: systems authorization, user specification, technical design, internal audit participation, program testing, and user testing and acceptance.Requireda. Explain the importance of each of the six activities in promoting effective control.b. Outline the tests of controls that the auditor would perform…
Internal auditors would most appropriately perform which of the following activities during a review of systems development activity?a. Serve on the MIS steering committee that determines what new systems are to be developed.b. Review the methodology used to monitor and control the system development function. c. Recommend specific automated procedures to be incorporated into new systems that will provide reasonable assurance that all data submitted to an application are converted to machine-readable form.d. Recommend specific operational procedures that will ensure that all data submitted for processing are converted to machine-readable form.
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