Tests of Controls: General Controls. The audit team of Packer Company identified thefollowing general controls in obtaining its overall understanding of Packer’s internal controlover the automated processing of transactions:1. Packer has routine maintenance on its computer equipment and related technology scheduled and performed every six months.2. Packer has formal, written systems development and documentation standards for theimplementation of new programs.3. Prior to implementing modifications to its existing programs, Packer tests and validatesthe program changes to ensure accurate processing.4. Packer has appropriately separated the responsibilities of systems analysts, programmers,and computer operators.5. Packer’s computer files are protected from loss through frequent backups and storage atan off-site location.6. Access to computer files and programs is protected through the use of passwords.7. On a monthly basis, Packer reviews any revisions in the access rights of its employeesto ensure consistency between their new job responsibilities and files and programs theymay access.Required:Consider the four methods of testing the operating effectiveness of controls (inquiry, observation, document examination, and reperformance). For each of the preceding controls, provide an example of how Packer’s audit team might choose to test the operating effectivenessof the control using the four methods of test of controls (e.g., how would the audit team useinquiry, observation, document examination, and reperformance to test control #1, routinemaintenance on computer equipment and related technology?). [Note: Not all types of testsof controls are appropriate for testing all of the controls.]
Tests of Controls: General Controls. The audit team of Packer Company identified the
following general controls in obtaining its overall understanding of Packer’s internal control
over the automated processing of transactions:
1. Packer has routine maintenance on its computer equipment and related technology scheduled and performed every six months.
2. Packer has formal, written systems development and documentation standards for the
implementation of new programs.
3. Prior to implementing modifications to its existing programs, Packer tests and validates
the program changes to ensure accurate processing.
4. Packer has appropriately separated the responsibilities of systems analysts, programmers,
and computer operators.
5. Packer’s computer files are protected from loss through frequent backups and storage at
an off-site location.
6. Access to computer files and programs is protected through the use of passwords.
7. On a monthly basis, Packer reviews any revisions in the access rights of its employees
to ensure consistency between their new job responsibilities and files and programs they
may access.
Required:
Consider the four methods of testing the operating effectiveness of controls (inquiry, observation, document examination, and reperformance). For each of the preceding controls, provide an example of how Packer’s audit team might choose to test the operating effectiveness
of the control using the four methods of test of controls (e.g., how would the audit team use
inquiry, observation, document examination, and reperformance to test control #1, routine
maintenance on computer equipment and related technology?). [Note: Not all types of tests
of controls are appropriate for testing all of the controls.]
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