MindTap Accounting, 1 term (6 months) Printed Access Card for Hall's Accounting Information Systems, 10th
10th Edition
ISBN: 9781337619257
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.
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.
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.
Chapter 16 Solutions
MindTap Accounting, 1 term (6 months) Printed Access Card for Hall's Accounting Information Systems, 10th
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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- 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.arrow_forwardWhen 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_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_forward
- Among 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_forwardWhich 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_forward
- Consider “control environment.” Why it is important for auditors to understand a client’s control environment. What are some limitations of internal controls? Now consider “segregation of duties.” Determine why it is important in an IT environment. What are some advantages of using IT and audit software when conducting an audit?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_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
- 1. Explain how client internal controls can be improved through the proper installation of IT. 2. Distinguish between random error resulting from manual processing and systematic error resulting from IT processing and give an example of each category of error. 3. Explain what is meant by auditing around the computer, and describe what must be present for this approach to be effective in the audit of a client that uses IT to process accounting information. 4. An audit client is in the process of creating an online Web-based sales ordering system for customers to purchase products using personal credit cards for payment. Identify three risks related to an online sales system that management should consider. For each risk, identify an internal control that could be implemented to reduce that risk. 00000000000arrow_forwardAn IT auditor is performing an application development audit for a high risk web-based application. In determining tests of controls, which of the following is a TRUE statement: 1. The IT auditor should limit testing to inquiry procedures with the lead developer. 2. Conduct inquiry procedures, corroborated by inspection of evidence. 3. Increase sample sizes due to the elevated risks associated with the application. a) 1, 2, and 3 b) 1 and 2 only c) 1 only d) 2 and 3 onlyarrow_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
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