Accounting Information Systems
10th Edition
ISBN: 9781337619202
Author: Hall, James A.
Publisher: Cengage Learning,
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Chapter 16, Problem 7P
To determine
Explain the concerns the auditor would have and the actions that the auditor would take.
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You are conducting substantive tests on the Accounts Receivable file to verify its accuracy. The file is large, and you decide to test only a sample of records. Because of the complexity of the database structure, you cannot access the database directly. The client's systems programmer uses a utility program to write a query that produces a flat file, which he provides for testing purposes. Discuss any concerns you would have as an auditor and any actions you would take.
You are conducting substantive tests on the accounts receivable file to verify its accuracy. The file is large, and you decide to test only a sample of the records. Because of the complexity of the database structure, you cannot access the database directly. The client’s systems programmer uses a utility program to write a query that produces a flat file, which he provides for testing purposes. Required Discuss any concerns you would have as an auditor and any actions you would take.
Case Study. You are conducting substantive tests on the Accounts Receivable file to verify its accuracy. The file is large, and you decide to test only a sample of records. Because of the complexity of the database structure, you cannot access the database directly. The client’s systems programmer uses a utility program to write a query that produces a flat file, which he provides for testing purposes. Discuss any concerns you would have as an auditor and any actions you would take.
Chapter 16 Solutions
Accounting Information Systems
Ch. 16 - Prob. 1RQCh. 16 - Prob. 2RQCh. 16 - Prob. 3RQCh. 16 - Prob. 4RQCh. 16 - Prob. 5RQCh. 16 - Prob. 6RQCh. 16 - Prob. 7RQCh. 16 - What is the importance of the SPL?Ch. 16 - Prob. 9RQCh. 16 - Prob. 10RQ
Ch. 16 - Prob. 11RQCh. 16 - Prob. 12RQCh. 16 - What tests may be conducted for identifying...Ch. 16 - Prob. 14RQCh. 16 - Prob. 15RQCh. 16 - Prob. 16RQCh. 16 - Prob. 17RQCh. 16 - Prob. 18RQCh. 16 - Prob. 19RQCh. 16 - Prob. 20RQCh. 16 - Prob. 1DQCh. 16 - Prob. 2DQCh. 16 - Prob. 3DQCh. 16 - What are rounding error routines, and why are they...Ch. 16 - Prob. 5DQCh. 16 - Prob. 6DQCh. 16 - Prob. 7DQCh. 16 - Prob. 8DQCh. 16 - The systems development life cycle is a...Ch. 16 - Prob. 10DQCh. 16 - Prob. 11DQCh. 16 - Compare and contrast the following techniques...Ch. 16 - Prob. 13DQCh. 16 - Prob. 1MCQCh. 16 - Prob. 2MCQCh. 16 - Which of the following is NOT an SDLC controllable...Ch. 16 - Prob. 4MCQCh. 16 - Which of the following statements is NOT correct?...Ch. 16 - Prob. 6MCQCh. 16 - Prob. 7MCQCh. 16 - Prob. 8MCQCh. 16 - Prob. 9MCQCh. 16 - Prob. 10MCQCh. 16 - Prob. 1PCh. 16 - Prob. 2PCh. 16 - Prob. 3PCh. 16 - Prob. 4PCh. 16 - Prob. 5PCh. 16 - Prob. 6PCh. 16 - Prob. 7PCh. 16 - Prob. 8PCh. 16 - Prob. 9PCh. 16 - The Balcar Companys external auditors are...Ch. 16 - Prob. 11PCh. 16 - Prob. 12PCh. 16 - Prob. 13PCh. 16 - Prob. 14PCh. 16 - Prob. 15PCh. 16 - Prob. 16PCh. 16 - Prob. 17PCh. 16 - Prob. 18P
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- Which of the following statements is most accurate? a. ERP systems are commercial software packages that are sometimes called turnkey systems because they can be implemented by the user with little or no modification. b. Substantive tests provide evidence focused on the system controls. c. Public accounting firms that provide attest services are not allowed under SOX to offer IT advisory services. d. Both small and large firms that have standardized information needs are potential customers for commercial software. e. External auditors may rely on the work of internal auditors only if they report to the controller or the CEO of the client company.arrow_forwardAmong the client electronic data processing (EDP) systems listed below, which one can typically undergo an audit without the need for examining or directly testing the EDP computer programs of the system? Select one: a. A system that updates a few essential master files and produces no printed output other than final balances. b. A system that affects a number of essential master files and produces a limited output. c. A system that performs relatively uncomplicated processes and produces detailed output. d. A system that performs relatively complicated processing and produces very little detailed output. Question 8 Not yet answered Marked out of 1 Flag question Question text In the aftermath of the initial stage of examiniarrow_forwardAmong the client electronic data processing (EDP) systems listed below, which one can typically undergo an audit without the need for examining or directly testing the EDP computer programs of the system?Select one: a. A system that updates a few essential master files and produces no printed output other than final balances. b. A system that affects a number of essential master files and produces a limited output. c. A system that performs relatively uncomplicated processes and produces detailed output. d. A system that performs relatively complicated processing and produces very little detailed output.arrow_forward
- Which of the following is an advantage of computer-assisted audit techniques (CAATs)?a. All the CAATs programs are written in one computer language.b. The software can be used for audits of clients that use differing computer equipment and file formats.c. The use of CAATs has reduced the need for the auditor to study input controls for computer-related procedures.d. The use of CAATs can be substituted for a relatively large part of the required testing.arrow_forwardA primary advantage of using generalized audit software packages to audit the financial statements of a client that uses a computer system is that the auditor may: a.Access information stored on computer files while having a limited understanding of the client’s hardware and software features. b.Consider increasing the use of substantive tests of transactions in place of analytical procedures. c.Substantiate the accuracy of data through selfchecking digits and hash totals. d.Reduce the level of required tests of controls to a relatively small amount.arrow_forwardWhen using test data, why are audit teams required to prepare only one transaction to test each IT control?a. The speed and efficiency of the computer results in reduced sample sizes.b. The risk of misstatement is typically lower in an IT environment.c. Audit teams generally perform more extensive substantive testing in an IT environment, resulting in less need to test processing controls.d. In an IT environment, each transaction is handled in an identical manner.arrow_forward
- When an auditor tests the internal controls of a computerized accounting system, which of the following is true of the test data approach? A. Test data are coded to a dummy subsidiary so they can be extracted from the system under actual operating conditions. B. Test data programs need NOT be tailor-made by the auditor for each client's computer applications. C. Test data programs usually consist of all possible valid and invalid conditions reguarding compliance with internal controls. D. Test data are processed with the client's computer and the results are compared with the auditor's predetermined results.arrow_forwardYou 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.arrow_forwardIn auditing program change control, the IT auditor will: a. Not need to inspect program authorization forms for signatures b. Ensure an organization is following the process described in their documentation for program change control c. Make sure that only computer programmers move their own changes into a production environment d. Make sure that only computer programmers have tested the changes they made to programsarrow_forward
- 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.arrow_forwardWhich of the following is NOT an audit technique for auditing computerized AIS? a. Continuous auditing b. All of the above are techniques used to audit computerized AIS c. parallel simulation d. Use of specialized control softwarearrow_forwardBased on an assessment of audit risk, the auditors are concerned with the following two risks: The risk that that the client might be making duplicate payments to vendors. The risk that the client’s accounting clerk might be making unauthorized payments to himself. Required: a. Assuming that the client has a manual accounting system, describe how the auditors can design a test to identify the duplicate payments and unauthorized payments. b. Assuming that the client has an IT accounting system, describe how the auditors might use data analytic software to design a test to identify the duplicate payments and the unauthorized payments. c. Describe the advantages of using data analytics software to identify unusual transactions or entries.arrow_forward
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