Exam 10: The impact of information technology on the audit process

The objective of the computer audit technique known as the 'test data approach' is to determine whether the client's computer programs can correctly process valid and invalid transactions.

Discuss the four areas of responsibility under the IT function that should be segregated in large companies.

The major disadvantage of generalised audit software is that its complexity limits its use primarily to IT specialists.

Which of the following are key to a successful software purchase decision?

Application controls vary with each application in the IT system.In attempting to review and gain an understanding of the internal control system, the auditor must evaluate the application controls for every:

Using the test data approach, the auditor processes a set of the client's actual transaction data using the auditor's computer programs on the auditor's computer equipment to determine whether the client's computer programs and equipment are processing data correctly.

Processing controls is a category of general controls.

The audit approach in which the auditor runs his or her own program on a controlled basis in order to verify the client's data recorded in a machine language is:

Internal control is ineffective when computer programmers:

After obtaining an understanding of IT internal control, if the auditor feels that control risk cannot be reduced, he or she will

Describe four common audit tasks that can be simplified by the use of microcomputers in practice.

Identify the three categories of application controls and give one example of each.

Tests of controls are normally performed only if the auditor believes the client's internal control may be effective.

IT controls are classified as either general or application controls.

Auditing around the computer:

Many clients have their data processed at an independent computer service centre (IT outsourcing).The difficulty the independent auditor faces when a computer service centre is used lies in:

In IT systems, if general controls are effective, it increases the auditor's ability to rely on application controls to reduce control risk.

Pre-designed formats for audit working papers and letters can be created and saved using both electronic spreadsheets and word processors.These are called:

Control risk is often affected by a complex IT system even if it enhances internal controls.

To obtain evidence that all external users in an e-commerce system are authorised, a 'firewall' channels all network connections through a: