- 15 Marks
AA – Nov 2021 – L2 – Q7 – Auditing in a Computerized Environment
Explains the conditions for a systems-based approach, CAATs, major transaction cycles, and elements of sales systems.
Question
The auditor takes a systems-based approach wherever possible and focuses on testing the systems and internal controls that produce the financial reporting figures of an organization rather than focusing on the figures themselves. Specialised techniques of obtaining audit evidence may be required by the auditors in an organization where the systems are Information Technology (IT) based.
Required:
a. Explain the TWO conditions that are necessary before the auditor can adopt a systems-based approach to audit assignment. (2 Marks)
b. Explain the term Computer-Assisted Audit Techniques (CAATs) and its disadvantages. (7 Marks)
c. Explain the term “Major Transaction Cycles” of an organization that the auditor should focus much of his audit work. (3 Marks)
d. State the elements of the sales system of an organization that the auditor should apply tests of controls. (3 Marks)
Find Related Questions by Tags, levels, etc.
- Tags: Audit evidence, CAATs, Major Transaction Cycles, Sales System, Systems-Based Approach
- Level: Level 2
- Topic: Auditing in a Computerized Environment
- Series: NOV 2021