Sharon, an audit manager assigned to the audit of Newsome Corporation is observing the client's revenue-receivables cycle. Sharon observes that the IT system responsible for processing and posting receivable transactions produces a daily exceptions report which is emailed to an accounts receivable clerk responsible for investigating the exceptions. Which of the following most accurately describes the type of control that is responsible for determining possible exceptions and forwarding them on to the accounts receivable clerk? • This type of control is typically referred to as a detective control. These types of controls usually assist the client in detecting items that need further investigation. These controls help to minimize misstatements in the financial statements. • This type of control is typically known as a manual IT control. This name is derived from the fact that although the control allows initial processing by the client's IT system, it is flagged for manual follow up. • A control of this nature is usually referred to as a preventive control. The control assumes this name because by generating notable items and exception reports for further investigation, the control prevents errors and fraud from occurring. • This type of control is typically referred to as an IT general control. A control that functions in this manner helps to ensure questionable transactions are not processed, and that potential misstatements in the financial statements are subsequently eliminated.
Sharon, an audit manager assigned to the audit of Newsome Corporation is observing the client's revenue-receivables cycle. Sharon observes that the IT system responsible for processing and posting receivable transactions produces a daily exceptions report which is emailed to an accounts receivable clerk responsible for investigating the exceptions. Which of the following most accurately describes the type of control that is responsible for determining possible exceptions and forwarding them on to the accounts receivable clerk? • This type of control is typically referred to as a detective control. These types of controls usually assist the client in detecting items that need further investigation. These controls help to minimize misstatements in the financial statements. • This type of control is typically known as a manual IT control. This name is derived from the fact that although the control allows initial processing by the client's IT system, it is flagged for manual follow up. • A control of this nature is usually referred to as a preventive control. The control assumes this name because by generating notable items and exception reports for further investigation, the control prevents errors and fraud from occurring. • This type of control is typically referred to as an IT general control. A control that functions in this manner helps to ensure questionable transactions are not processed, and that potential misstatements in the financial statements are subsequently eliminated.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Sharon, an audit manager assigned to the audit of Newsome Corporation is observing the client's revenue-receivables cycle. Sharon
observes that the IT system responsible for processing and posting receivable transactions produces a daily exceptions report which is
emailed to an accounts receivable clerk responsible for investigating the exceptions. Which of the following most accurately describes
the type of control that is responsible for determining possible exceptions and forwarding them on to the accounts receivable clerk?
• This type of control is typically referred to as a detective control. These types of controls usually assist the client in detecting items
that need further investigation. These controls help to minimize misstatements in the financial statements.
• This type of control is typically known as a manual IT control. This name is derived from the fact that although the control allows
initial processing by the client's IT system, it is flagged for manual follow up.
• A control of this nature is usually referred to as a preventive control. The control assumes this name because by generating notable
items and exception reports for further investigation, the control prevents errors and fraud from occurring.
• This type of control is typically referred to as an IT general control. A control that functions in this manner helps to ensure
questionable transactions are not processed, and that potential misstatements in the financial statements are subsequently
eliminated.
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