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Chapter 18 notes - audit of system conversion.docx

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York University
Administrative Studies
ADMS 4552

ADMS 4552 Chapter 18 notes Audit of System Conversion When an organization changes an entire system or set of system, 3 issues - New system of internal controls needs to be documented and evaluated o May require new procedures - Auditor will need to audit the actual data conversion process o Requires a risk assessment process o Inherent risk may increase o If implementation process is properly planned, conducted and supervised, you can rely on controls more…. If controls over that are poor, auditor must conduct tests of details of balances - Auditor will need to determine whether accounting policies have been changed o For example LIFO to FIFO… gather sufficient evidence that there is adequate disclosure for this change - 2 audit objectives are NOT included - classification (accuracy and agreement between two systems ensures classification is satisfied, and posting and summarization) - Tests can be simplified into 3 types: o Comparing details between both systems to verify that only accurate, authorized information has been established o Comparing balances for accuracy, and that no transactions have been omitted o Cut-off testing to ensure that transactions are included in only the proper system and have not been omitted - Conversion audit - comprises the audit procedures required when an organization changes its system to a different one… emphasis is on accuracy and cut-off Audit Objective Key Internal Control
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