The deficiency in internal control exists when properly designed control is not implicated efficiently by the authority that is in charge ofthe organization’s control. Any deficiency in internal control is identified in the process of internal audit. To identify: The correct statement for the given situation.

Question

An IT auditor is conducting data analysis procedures on an employee expense report file and notices several expenses for $24.99 from the same individual. The company’s policy requires that any expenses that are under $25.00 do not require a receipt. The IT auditor should: [SELECT ALL THAT APPLY a) Maintain professional skepticism and investigate these transactions further b) Pass on investigating these items further, focusing on higher dollar amounts c) Evaluate the business process approval controls, and related procedures d) Discuss fraud awareness and detection programs with management to gain an understanding of management’s commitment to fraud prevention and related entity-level anti-fraud controls.

Answer 1

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Chapter 3, Problem 35CYBK

To determine

Introduction: The deficiency in internal control exists when properly designed control is not implicated efficiently by the authority that is in charge ofthe organization’s control. Any deficiency in internal control is identified in the process of internal audit.

To identify: The correct statement for the given situation.

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An IT auditor is conducting data analysis procedures on an employee expense report file and notices several expenses for $24.99 from the same individual. The company’s policy requires that any expenses that are under $25.00 do not require a receipt. The IT auditor should: [SELECT ALL THAT APPLY a) Maintain professional skepticism and investigate these transactions further b) Pass on investigating these items further, focusing on higher dollar amounts c) Evaluate the business process approval controls, and related procedures d) Discuss fraud awareness and detection programs with management to gain an understanding of management’s commitment to fraud prevention and related entity-level anti-fraud controls.

If a client relies on information technology (IT) controls and the auditor plans to assess control risk as low for payroll assertions, the auditor will usually do all of the following, EXCEPT _______. --test the effectiveness of manual controls --use computer-assisted audit techniques (CAATs) to evaluate the effectiveness of IT application controls --test the effectiveness of manual procedures to follow up on exceptions --All of the answer choices are correct.

The following internal controls were identified by the auditor while gaining an understanding of internal control for the sales cycle. Access to the customer master file is restricted to authorized personnel. Customers are added to the master file only after appropriate approval, including adequate background and credit checks. Sales are made only to approved customers. The computer system rejects orders if the customer number is invalid or the order exceeds the customer’s approved credit limit. The computer matches the products and quantities on the customer order, shipping document, and sales invoice and generates an exception report of differences for follow-up in the accounting department. The computer generates a daily list of unmatched shipping documents. The sales clerk follows up on each exception and electronically signs the report when they are resolved. Invoice prices are obtained from the price master file. Any changes to the standard prices on an invoice must be…