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Canada (162,200)
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ADM4346 (10)
Chapter 11

Chapter #11.docx

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Sheldon Weatherstone

Chapter 11: Auditing Computer-Based Information Systems Auditing • The systematic process of obtaining and evaluating evidence regarding assertions about economic actions and events in order to determine how well they correspond with established criteria Types of Audits • Financial o Examines the reliability and integrity of:  Financial transactions, accounting records, and financial statements. • Information System o Reviews the controls of an AIS to assess compliance with:  Internal control policies and procedures and effectiveness in safeguarding assets • Operational o Economical and efficient use of resources and the accomplishment of established goals and objectives • Compliance o Determines whether entities are complying with:  Applicable laws, regulations, policies, and procedures • Investigative o Incidents of possible fraud, misappropriation of assets, waste and abuse, or improper governmental activities. The Audit Process • Planning • Collecting Evidence • Evaluating Evidence • Communicating Audit Results Planning the Audit • Why, when, how, whom • Work targeted to area with greatest risk: o Inherent  Chance of risk in the absence of controls o Control  Risk a misstatement will not be caught by the internal control system o Detection  Chance a misstatement will not be caught by auditors or their procedures Collection of Audit Evidence • Not everything can be examined so samples are collected • Observation activates to be audited • Review of documentation o Gain understanding of process or control • Discussions • Questionnaires • Physical examination • Confirmations o Testing balances with external 3 parties • Re-performance o Recalculations to test values • Vouching o Examination of supporting documents • Analytical review o Examining relationships and trends Evaluation of Audit Evidence • Does evidence support favorable or unfavorable conclusion? • Materiality o How significant is the impact of the evidence? • Reasonable Assurance o Some risk remains that the audit conclusion is incorrect. Communication of Audit Conclusion • Written report summarizing audit findings and recommendations: o To management o The audit committee o The board of directors o Other appropriate parties Risk-Based Audit • Determine the threats (fraud and errors) facing the company. o Accidental or intentional abuse and damage to which the system is exposed • Identify the control procedures that prevent, detec
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