Veronica is the information systems (IS) auditor of Puno Corporation. In the execution of the audit, Veronica wants to know how the controls are established in the departments within the organization. Specifically, she wants to know how responsibilities are segregated in each d
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Veronica is the information systems (IS) auditor of Puno Corporation. In the execution of the audit,
Veronica wants to know how the controls are established in the departments within the organization.
Specifically, she wants to know how responsibilities are segregated in each department.
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Solved in 2 steps
- Anna Santos audited the information system of Flores Corporation. Upon her evidence collection, she wanted to verify if the management assumes full responsibility for formulating, developing, documenting, promulgating, and controlling policies covering general aims and directivesSteve Ankenbrandt, president of Beeb Corporation, has been discussing the company’s internal operations with the presidents of several other multidivision companies. Ankenbrandt discovered that most of them have an internal audit staff. The activities of the staffs at other companies include financial audits, operational audits, and sometimes compliance audits. Required: Describe the meaning of the following terms as they relate to the internal auditing function: a. Financial auditing. b. Operational auditing. c. Compliance auditing.Read the given cases. Then, identify the most applicable technique of gathering evidence in each case. 1. Anna Santos audited the information system of Flores Corporation. Upon her evidence collection, she wanted to verify if the management assumes full responsibility for formulating, developing, documenting, promulgating, and controlling policies covering general aims and directives. 2. Veronica is the information systems (IS) auditor of Puno Corporation. In the execution of the audit, Veronica wants to know how the controls are established in the departments within the organization. Specifically, she wants to know how responsibilities are segregated in each department. 3. Brylle is one of the auditors of Alejandria Corporation (AC). He was assigned to test the controls over the cash of Alejandria. The accountant of AC prepares monthly bank reconciliation through the use of Microsoft Excel. Brylle wanted to know if the final amounts in the bank reconciliation are correct…
- Organizations often rely on their in-house audit department to ensure that their internal controls are being properly evaluated. Internal auditors at Babylion Company are subordinates of the controller. Comment on how well this framework works.Which of the following statements is characteristic of monitoring activities within the internal control system? Monitoring of the internal control system is the responsibility of the company’s external auditors. Monitoring of internal control activities is not required if the company hires honest, ethical employees. Monitoring of the internal control system is the responsibility of management. The board of directors need not be concerned with results of the monitoring of the internal control system.Organizations often rely on their in-house audit department to ensure that their internal controls are working properly. It is the controller who is in charge of Babylion's internal audits. Comment on the structure's efficacy.
- Your company, Tractors, Inc., is employing the SDLC for its new information system. You have been chosen as a member of the development team because of your strong accounting background. This background includes a good understanding of both financial and managerial accounting concepts and required data. You also possess a great understanding of internal control activities. You do not, however, fully understand exactly what the internal auditors will need from the system in order to comply with Section 404 of the Sarbanes-Oxley Act. Lay out the fact-gathering techniques you might employ to increase your understanding of this important component of your new system.You are an audit supervisor assigned to a new client which is listed on a Stock Exchange. You visited the corporate headquarters to become acquainted with key personnel and to conduct a preliminary review of the company’s accounting policies, controls, and systems. During this visit, (e) You were told that the performance of division and department managers is evaluated on a subjective basis, because top management believes that formal performance evaluation procedures are counterproductive. Identify the problems and explain them in relation to the internal environment.An organization’s internal audit department is usually considered an effective control mechanism for evaluating the organization’s internal control structure. The Babylion Company’s internal auditing function report directly to the controller. Comment on the effectiveness of this structure.
- Which of the following is an attribute of the internal control procedure—assignment of responsibilities? A. The external auditors will monitor internal controls. B. The company should separate the custody of assets from accounting. C. Each position has clearly assigned responsibilities. D. To validate their accounting records, a company should have an audit by an external accountant.In this section, we will discuss the numerous alternatives for putting an internal audit function inside a company and the associated benefits and drawbacks for each recognized option. What are the most important considerations for building a successful internal audit function in an organization?Johnson, CPA, has been engaged to audit the financial statements of Rose, Inc., a publicly held retailing company. Before assessing control risk, Johnson is required to obtain an understanding of Rose’s control environment. Required: a. Identify additional control environment factors (excluding the factors illustrated in the following example) that set the tone of an organization, influencing the control consciousness of its people. b. For each control environment factor identified in part (a), describe the components and why each component would be of interest to the auditor. Use the following format: Integrity and Ethical Values The effectiveness of controls cannot rise above the integrity and ethical values of the people who create, administer, and monitor them, Integrity and ethical values are essential elements of the control environment, affecting the design, administration, and monitoring of other components. Integrity and ethical behavior are the products of the entity's…
