Accounting Information Systems
10th Edition
ISBN: 9781337619202
Author: Hall, James A.
Publisher: Cengage Learning,
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Chapter 16, Problem 9MCQ
To determine
Identify the statement which is not a SDLC control issue during an audit.
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Which of the following BEST (select one) describes why risk assessment can be viewed as the foundation of the audit function:
a) Risk assessment provides a framework for allocating limited resources to achieve maximum benefits and value derived from the audit process.
b) Risk assessment enables flexibility in approaching audits and the performance of control testing.
c) Risk assessment enables an orderly approach to conducting audits.
d) Rsk assessment provides for a measurement criteria to evaluate audit results and communicate to management.
Study and Evaluation of Management Control. The study and evaluation of management risk mitigation control is not easy. First, auditors must determine the risks and the controls subject to audit. Then they must find a standard by which performance of the control can be evaluated. Next they must specify procedures to obtain the evidence on which an evaluationcan be based. Insofar as possible, the standards and related evidence must be quantified. The following description gives certain information (in italics) that internal auditors would know about or be able to determine on their own. Fulfilling the requirement thus amounts to taking some information from the scenario and figuring out other things by using accountants’ and auditors’ common sense.The ScenarioAce Corporation ships building materials to more than a thousand wholesale and retail customers in a five-state region. The company’s normal credit terms are net/30 days, and no cash discounts are offered. Fred Clark is the chief…
Which of the following statements best describes the phrase, “evaluating the design of a control”?
Group of answer choices
A. Considering whether the control, individually or in combination with other controls, is capable of effectively preventing, or detecting and correcting, material misstatements.
B. Expressing an opinion as to the effectiveness of a control.
C. Observing the application of specific controls.
D. Determining whether the control exists and that the entity is using it.
Chapter 16 Solutions
Accounting Information Systems
Ch. 16 - Prob. 1RQCh. 16 - Prob. 2RQCh. 16 - Prob. 3RQCh. 16 - Prob. 4RQCh. 16 - Prob. 5RQCh. 16 - Prob. 6RQCh. 16 - Prob. 7RQCh. 16 - What is the importance of the SPL?Ch. 16 - Prob. 9RQCh. 16 - Prob. 10RQ
Ch. 16 - Prob. 11RQCh. 16 - Prob. 12RQCh. 16 - What tests may be conducted for identifying...Ch. 16 - Prob. 14RQCh. 16 - Prob. 15RQCh. 16 - Prob. 16RQCh. 16 - Prob. 17RQCh. 16 - Prob. 18RQCh. 16 - Prob. 19RQCh. 16 - Prob. 20RQCh. 16 - Prob. 1DQCh. 16 - Prob. 2DQCh. 16 - Prob. 3DQCh. 16 - What are rounding error routines, and why are they...Ch. 16 - Prob. 5DQCh. 16 - Prob. 6DQCh. 16 - Prob. 7DQCh. 16 - Prob. 8DQCh. 16 - The systems development life cycle is a...Ch. 16 - Prob. 10DQCh. 16 - Prob. 11DQCh. 16 - Compare and contrast the following techniques...Ch. 16 - Prob. 13DQCh. 16 - Prob. 1MCQCh. 16 - Prob. 2MCQCh. 16 - Which of the following is NOT an SDLC controllable...Ch. 16 - Prob. 4MCQCh. 16 - Which of the following statements is NOT correct?...Ch. 16 - Prob. 6MCQCh. 16 - Prob. 7MCQCh. 16 - Prob. 8MCQCh. 16 - Prob. 9MCQCh. 16 - Prob. 10MCQCh. 16 - Prob. 1PCh. 16 - Prob. 2PCh. 16 - Prob. 3PCh. 16 - Prob. 4PCh. 16 - Prob. 5PCh. 16 - Prob. 6PCh. 16 - Prob. 7PCh. 16 - Prob. 8PCh. 16 - Prob. 9PCh. 16 - The Balcar Companys external auditors are...Ch. 16 - Prob. 11PCh. 16 - Prob. 12PCh. 16 - Prob. 13PCh. 16 - Prob. 14PCh. 16 - Prob. 15PCh. 16 - Prob. 16PCh. 16 - Prob. 17PCh. 16 - Prob. 18P
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- Select the best answer for each of the follwing items and give reasons for your choice. a. Which of the following best describes the relationship between assurance services and attest services? (1) While attest services involved financial data, assurance services involve nonfinancial data (2) While attest services require objectivity, assurance services do not require objectivity (3) All attest services require independence. (4) Attest and assurance services are different terms referring to the same types of servicesarrow_forwardInternal auditors would most appropriately perform which of the following activities during a review of systems development activity?a. Serve on the MIS steering committee that determines what new systems are to be developed.b. Review the methodology used to monitor and control the system development function. c. Recommend specific automated procedures to be incorporated into new systems that will provide reasonable assurance that all data submitted to an application are converted to machine-readable form.d. Recommend specific operational procedures that will ensure that all data submitted for processing are converted to machine-readable form.arrow_forwardDiscuss the differences between a first-party, second-party, and third-party audit. Discuss the importance of data accuracy and integrity in a quality information system. What are the purposes of quality documentation systems? What would be the foremost characteristics of an acceptable sampling plan for critical defects?arrow_forward
- If recommendations are made to the audit report noted problems and weaknesses, written responses detailing the following are requested from the audit client: a. A corrective action plan to resolve the problem and its root cause. b. The person responsible for implementing the corrective action. c. An expected implementation date. d. All of the optionsarrow_forward1. List three reasons management may ask for an operational audit to be performed and explain how the audit program would be impacted by each of them. 2. Explain the importance of identifying risk factors and using them during the planning phase. 3. Give two examples where document inspection is a useful technique to examine operational risks and related controls. 4. Explain professional skepticism and why it is important for all auditors. 5. Explain the acronym CCCER. 6. What are the defining characteristics of persuasive audit evidence? 7. What are the key characteristics of well prepared working papers? 8. What do internal auditors mean when they refer to the nature, extent, and timing of audit procedures? 9. What information should be included in a well designed final assurance engagement communication? 10. What actions regarding assurance engagement observations must the internal audit function take after the final engagement communication is disseminated?arrow_forwardWhen a substantive audit strategy is adopted, an auditor will O determine internal controls are effective in mitigating risks. O increase the amount of their substantive testing. O test controls extensively. O not need to document the internal control system.arrow_forward
- Which of the following encompass many elements of general best practices? Choices: A. Ensuring that audit paths are generally horizontal and/or vertical, and are as short as possible subject to this. B. Grouping together inputs, as well as calculated items that are related to each other. C. Creating a clear direction of logical flow within each worksheet. D. All are elements of general best practices. E. Using as few worksheets (and workbooks) as possiblearrow_forward(c) Using your knowledge of the relationships among acceptable audit risk, inherent risk, control risk, planned detection risk, performance materiality, and planned evidence, State the effect that changing each of the following factors, while the other factors remain unchanged will have on planned work and evidence (state whether it will increase or decrease the planned audit work and evidence ) 1. an increase in acceptable audit risk 2. an increase in inherent risk 3. a decrease in control risk 4. an increase in planned detection risk 5. an increase in performance materialityarrow_forwardWhich activities are performed in a change management audit? a) Assessment of the "design" of the change management controls b) "Operating effectiveness" testing of change approvals c) Assess source code management d) All of the abovearrow_forward
- A feasibility study for a new computer system should a. consider costs, savings, controls, profit improvement, and other benefits analyzed by application area. b. provide the preliminary plan for converting existing manual systems and clerical operations. c. provide management with assurance from qualified, independent consultants that the use of a computer system appeared justified. d. include a report by the internal audit department that evaluated internal control features for each planned application.arrow_forwardWhen the auditor has assessed control risk of a particular area at a reduced level, he or she will then Select one: a. eliminate the need to gather evidence in that area. b. test the effectiveness of the controls in that area. c. proceed to expand the sample sizes in that area. d. negotiate with management to determine which controls will be tested in that area.arrow_forwardWhich of the following is NOT a task performed in the audit planning phase? a. reviewing an organization’s policies and practicesb. determining the degree of reliance on controls c. reviewing general controls d. planning substantive testing proceduresarrow_forward
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