operations supervisor, and other employees to complete your standardized computer internal control questionnaire. You report to your supervisor that the company has designed a successful set of comprehensive internal controls into its computer systems. He thanks you for your efforts and asks for a summary report of your findings for inclusion in a final overall report on accounting internal controls. <para>Have you forgotten an important audit step? Explain. List five examples of specific audit procedures that you might recommend before reaching a conclusion. </para></problem> The important audit step that has not been performed is tests of controls (sometimes called compliance tests). A system review only tells the auditor what controls are prescribed. Tests of controls allow the auditor to determine whether the prescribed controls are being adhered to and they are operating effectively. Examples of audit procedures that would be considered tests of controls are: Observe computer operations, data control procedures, and file library control procedures. Inquiry of key systems personnel with respect to the way in which prescribed control procedures are interpreted and implemented. A questionnaire or checklist often facilitates such inquiry. Review a sample of source documents for proper authorization. Review a sample of on-line data entries for authorization. Review the data control log, computer operations log, file librarian's log, and error log for evidence that prescribed policies are adhered to. Test data processing by submitting a set of hypothetical transactions and comparing system outputs with expected results. Trace selected transactions through the system and check their processing accuracy. Check the accuracy of a sample of batch totals. Review system operating statistics. Use a computer audit software package to edit data on selected master files and databases. 11.3 As an internal auditor, you have been assigned to evaluate the controls and operation of a computer payroll system. To test the computer systems and programs, you submit independently created test transactions with regular data in a normal production run. <orderedlist numeration="loweralpha" inheritnum="ignore" type="ll" continuation="restarts"><listitem><para><inst></inst>List four advantages and two disadvantages of this technique.</para></listitem> <listitem><para><ins</i</para></listitem></orderedlist> a. Advantages b. Disadvantages
operations supervisor, and other employees to complete your standardized computer internal control questionnaire. You report to your supervisor that the company has designed a successful set of comprehensive internal controls into its computer systems. He thanks you for your efforts and asks for a summary report of your findings for inclusion in a final overall report on accounting internal controls. <para>Have you forgotten an important audit step? Explain. List five examples of specific audit procedures that you might recommend before reaching a conclusion. </para></problem> The important audit step that has not been performed is tests of controls (sometimes called compliance tests). A system review only tells the auditor what controls are prescribed. Tests of controls allow the auditor to determine whether the prescribed controls are being adhered to and they are operating effectively. Examples of audit procedures that would be considered tests of controls are: Observe computer operations, data control procedures, and file library control procedures. Inquiry of key systems personnel with respect to the way in which prescribed control procedures are interpreted and implemented. A questionnaire or checklist often facilitates such inquiry. Review a sample of source documents for proper authorization. Review a sample of on-line data entries for authorization. Review the data control log, computer operations log, file librarian's log, and error log for evidence that prescribed policies are adhered to. Test data processing by submitting a set of hypothetical transactions and comparing system outputs with expected results. Trace selected transactions through the system and check their processing accuracy. Check the accuracy of a sample of batch totals. Review system operating statistics. Use a computer audit software package to edit data on selected master files and databases. 11.3 As an internal auditor, you have been assigned to evaluate the controls and operation of a computer payroll system. To test the computer systems and programs, you submit independently created test transactions with regular data in a normal production run. <orderedlist numeration="loweralpha" inheritnum="ignore" type="ll" continuation="restarts"><listitem><para><inst></inst>List four advantages and two disadvantages of this technique.</para></listitem> <listitem><para><ins</i</para></listitem></orderedlist> a. Advantages b. Disadvantages
rais12_SM_CH11.docx