Topic: Audit of IT Systems and Data Analytics

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AAA – May 2019 – L3 – Q3 – Audit of IT Systems and Data Analytics

Explain COBIT as an IT governance tool, its purpose, and six specific components of the framework.

Question

Jemigboran Commercial Industries has been operating for some years. Its management has sought your input as the auditor of the company on a proposal by the information technology (IT) team of the company to introduce a framework as “Control Objectives for Information and Related Technologies (COBIT)” for its operations.

Required:
a. Explain COBIT as an IT governance tool, and the purpose it serves in an organisation. (8 Marks)
b. Identify and explain SIX specific components of COBIT. (12 Marks)

Answer

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Tags: COBIT, Control Objectives, IT Governance, Risk Management
Level: Level 3

Topic: Audit of IT Systems and Data Analytics

AAA – Nov 2014 – L3 – SC – Q7 – Audit of IT Systems and Data Analytics

Evaluates factors influencing the use of CAATs in audit planning and identifies solutions to address audit trail loss.

Question

CAATs

The availability of Computer Assisted Audit Techniques (CAATs) should be considered by auditors when planning the nature, extent, and timing of tests in an audit. Auditors must determine their testing strategies which will depend on their choice of either using a manual testing method or a computer-assisted method.

Required:

(a) Explain FIVE factors that will determine auditors’ choice of method of testing in the planning of an audit in a computer environment. (10 Marks)

(b) Identify FIVE solutions to loss of audit trail. (5 Marks)

Answer

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Tags: AATs, Audit Planning, Audit Techniques, Audit trail, Data Analytics, IT Systems, Risk Management, Testing Methods
Level: Level 3

Topic: Audit of IT Systems and Data Analytics
Series: NOV 2014

AAA – Nov 2013 – L3 – SB – Q4 – Audit of IT Systems and Data Analytics

Discuss factors influencing the choice of audit testing methods in a computer environment and propose solutions to address the loss of audit trail.

Question

The availability of computer-assisted audit techniques should be considered by the auditor when planning the nature, extent, and timing of tests in an audit. The auditor must determine his testing strategies which will depend on his choice of either using a manual testing method or computer-assisted method.

You are required to:

(a) Explain FIVE factors that will determine the auditor’s choice of method of testing in the planning of an audit in a computer environment. (10 Marks)

(b) Identify FIVE solutions to loss of audit trail. (5 Marks)

(Total: 15 Marks)

Answer

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Tags: Audit Planning, Audit testing methods, Audit trail, Computer-Assisted Audit Techniques, Data Analytics, IT Systems, manual testing, Risk Assessment
Level: Level 3

Topic: Audit of IT Systems and Data Analytics
Series: NOV 2013

AAA – Nov 2013 – L3 – AII – Q13 – Audit of IT Systems and Data Analytics

Identify the term for reprocessing actual data in an EDP environment using audit-controlled software.

Question

In an Electronic Data Processing (EDP) environment, the reprocessing of actual entity data using audit-controlled software is called………….simulation.

Answer

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Tags: Audit Simulation, Data Reprocessing, EDP
Level: Level 3

Topic: Audit of IT Systems and Data Analytics
Series: NOV 2013

AAA – Nov 2013 – L3 – AII – Q4 – Audit of IT Systems and Data Analytics

Identifies the computer file used to record and maintain payroll transactions and cumulative data.

Question

A computer file for recording payroll transactions for each employee and maintaining total employee salaries paid and related data for the year to date is called……………………………

Answer

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Tags: Audit Procedures, Data Files, Employee Records, IT Systems, Payroll
Level: Level 3

Topic: Audit of IT Systems and Data Analytics
Series: NOV 2013

AAA – May 2023 – L3 – Q2 – Audit of IT Systems and Data Analytics

Discuss challenges and solutions for e-commerce assurance, ethical principles for forensic investigation, and assurance engagement reporting requirements.

Question

There is an indication of increasing application of technology in the business and commercial world. Many activities are now carried out on a real-time basis, and payment systems are gradually reducing the use of cheques.

Your new audit client is one of the companies that has recently enhanced its business settings with respect to receipts and payments. The previous auditor has little depth in information and communication technology despite the growing trend. The client’s management also thinks that its performance in the past has been inadequately reported due to the complicity of the key accounting staff and inadequacies of the previous auditor. The client is therefore considering its options in the circumstances.

Required:

(a) Discuss the challenges encountered in the provision of assurance engagements on e-commerce systems and the approach to address these challenges. (8 Marks)

(b) Evaluate the ethical principles that will be relevant in the conduct of forensic investigation of this client and the considerations the accountant needs to bear in mind in such an assignment. (7 Marks)

Answer

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Tags: Assurance engagements, E-commerce Systems, Ethical Principles, Forensic Investigation, Reporting Standards
Level: Level 3

Topic: Audit of IT Systems and Data Analytics, Forensic Auditing

AAA – Nov 2016 – L3 – Q4b – Audit of IT Systems and Data Analytics

Identify solutions to address the loss of an audit trail in computer-assisted or manual testing.

Question

The availability of Computer-Assisted Audit Techniques should be considered by the Auditor when planning the nature, extent, and timing of tests in an audit. The Auditor must determine their testing strategies, which will depend on their choice of either using a Manual Testing Method or a Computer-Assisted Method.

Required:
Identify FIVE solutions to the loss of an audit trail. (5 Marks)

Answer

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Tags: Audit Planning, Audit trail, CAATs, Loss of Data, Testing strategies
Level: Level 3

Topic: Audit of IT Systems and Data Analytics

AAA – Nov 2016 – L3 – Q4a – Audit of IT Systems and Data Analytics

Evaluate the advantages and disadvantages of test data and audit software for compliance and substantive testing.

Question

You have been appointed as the Auditor of a company whose accounting transactions are processed using a computer. You have decided to use Computer-Assisted Audit Techniques (CAATs) to generate evidence for the audit assignment.

Required:
i. State FOUR advantages and THREE disadvantages of using test data in compliance testing of application controls. (7 Marks)
ii. List FOUR activities for which audit software may be used to perform substantive tests by the auditor. (4 Marks)
iii. List TWO advantages and TWO disadvantages of the use of audit software. (4 Marks)

Answer

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Tags: Application Controls, Audit Software, CAATs, Compliance Testing, Substantive Testing, Test Data
Level: Level 3

Topic: Audit of IT Systems and Data Analytics

AAA – Nov 2016 – L3 – Q1 – Forensic Auditing

Evaluate significant audit issues related to fraud by the MD/CEO, disclosure of discontinued operations, and audit responsibilities for internet banking.

Question

Havana Bank Plc was listed on the Nigerian Stock Exchange in February 2015. There was an initial public offer in the same period with proceeds of N5 billion. Part of the proceeds was expected to be utilized to strengthen the bank’s internet banking facility.

In November of the same year, the Managing Director/Chief Executive Officer (MD/CEO) proceeded on a three-week vacation to the United Kingdom but did not return at the time of concluding the audit of the 2015 financial statements early in 2016. It was observed that the MD/CEO had absconded with documents relating to the public offer. It was also noted that he kept drawing cash whilst in the United Kingdom amounting to N922 million.

The Bank closed its Gambian operations in June 2015 because it had made losses for two consecutive years. Prior to the two years before the closure, the operations in Gambia had grown into a network of five branches, contributing 15 percent of the gross income and 9.5 percent of the net profits of the group. The closure was not disclosed in the financial statements, but reference was made to the closure in the directors’ report.

As the Audit Manager in the firm of Chartered Accountants that audits Havana Bank Plc, you are required to:
a. Identify and explain the significant audit matters you will consider in forming an opinion in relation to the missing documents and the cash drawings by the absconded MD/CEO. (10 Marks)
b. Analyse and evaluate your views on the non-inclusion of the discontinued Gambian operations in the financial statements. (10 Marks)
c. Explain FIVE duties, as an auditor, in relation to the bank’s internet banking. (10 Marks)

Answer

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Tags: Audit opinion, Discontinued Operations, Financial Disclosures, Fraud investigation, Internet Banking Audit
Level: Level 3

Topic: Audit of IT Systems and Data Analytics, Forensic Auditing

AAA – Nov 2013 – L3 – A – Q5 – Audit of IT Systems and Data Analytics

This question assesses knowledge of common computer-assisted audit techniques used by auditors.

Question

Which of the following is NOT a computer-assisted audit technique used by auditors?
A. Integrated testing facility
B. Black box
C. System control and review facility
D. Parallel simulation
E. Snapshot

Answer

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Tags: Audit Tools, Computer-Assisted Audit Techniques, IT Audit
Level: Level 3

Topic: Audit of IT Systems and Data Analytics
Series: NOV 2012

AAA – Nov 2013 – L3 – A – Q2 – Audit of IT Systems and Data Analytics

This question assesses the knowledge of internal controls in a computerized accounting system.

Question

In order to understand the internal control system of a computerized accounting system of a client, which of the following computer documentation will assist the auditor the most?
A. System narrative
B. Record layout
C. Programme listing
D. Record counts
E. System flow charts

Answer

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Tags: Audit, Internal Control, IT Systems
Level: Level 3

Topic: Audit of IT Systems and Data Analytics
Series: NOV 2013

AAA – Nov 2012 – L3 – SA – Q20 – Audit of IT Systems and Data Analytics

Identifying items not classified as computer audit programs.

Question

Which of the following is NOT an example of Computer Audit Program?

A. Computer audit software
B. Computer audit packages
C. Purpose written computer audit
D. Client’s installed file interrogation program

Answer

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Tags: Audit Tools, Computer Audit Programs, Data Analytics, IT Systems
Level: Level 3

Topic: Audit of IT Systems and Data Analytics
Series: NOV 2012

AAA – Nov 2012 – L3 – SA – Q15 – Audit of IT Systems and Data Analytics

Key focus areas for IT Auditors in a risk-based audit program.

Question

While developing a risk-based audit program, the Information Technology Auditor most likely will focus on:

A. Strategic controls
B. Critical IT applications
C. Operation control
D. Business strategy
E. Business process

Answer

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Tags: Audit Focus, Critical Applications, IT Audit, IT Systems, Risk-Based Audit
Level: Level 3

Topic: Audit of IT Systems and Data Analytics
Series: NOV 2011

AAA – Nov 2021 – L3 – Q7 – Audit of IT Systems and Data Analytics

Discuss control environment requirements of ISA 315 and evaluate control activities for Egunje Distributors Ltd.

Question

Egunje Distributors Limited is a private company in which Chief Idowu is the major shareholder. Chief Idowu set up the business to help provide resources for his philanthropic gestures. He has been involved in the major control activities, and the business was achieving its purpose, and things were working well.

After a number of years, Chief Idowu stepped aside from the business and handed over effective management to one of his subordinates, whom he elevated to the rank of General Manager (GM). The GM followed Chief Idowu’s control processes for only one year and then introduced new ideas and processes, resulting in undue amounts being transferred into his private accounts rather than the company’s accounts. This has affected the results of the company.

While Chief Idowu has not decided to take any hasty action, he has decided to bring in your firm, due to its size, so that through your work, he may understand the reasons for the dwindling performance. It has been discussed and agreed that your report on the audit will provide insight into the reasons for the observed decline in performance.

Required:

a. Discuss the control environment, focusing on the requirements of ISA 315 – Identifying and assessing the risk of material misstatement through understanding the entity and its environment, that will be relevant to this situation. (9 Marks)

b. Evaluate the control activities that will require your attention. (6 Marks)

Answer

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Tags: Audit Planning, Control Activities, Control Environment, Internal Controls, ISA 315, Risk of Misstatement
Level: Level 3

Topic: Audit of IT Systems and Data Analytics

AAA – Nov 2021 – L3 – Q6 – Audit of IT Systems and Data Analytics

Outline application controls for computerised systems and develop an audit strategy following ISA 300 for large, computerised clients.

Question

The firm you work for has considered the growing development in some sectors of the economy and the opportunities this development portends.

Your firm is a sole practitioner, and though the partner has the skills and professional competences necessary to undertake big jobs, applications for big jobs have always been turned down.

To get involved and secure some of these big jobs, your partner has dialogued with some other sole practitioners who share the same view. They have agreed to operate a merged firm starting in the year 2022. Appropriate registration of the new practice name with the Corporate Affairs Commission and application for a license in the new name from the Institute are being processed. To prepare for securing and executing some of these big jobs, preparations are set to commence once the registrations are approved. Some of the target jobs involve computerised entities, so your partner has assigned you some preparatory tasks, as he is the lead partner.

Required:

a. Prepare a document showing the application controls that will be focused on in the computerised systems of the entities. (7 Marks)

b. Develop an appropriate audit strategy in accordance with ISA 300, “Planning an audit of financial statements.” (8 Marks)

Answer

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Tags: Application Controls, Audit Planning, Audit strategy, Computerised entities, ISA 300, IT Audit
Level: Level 3

Topic: Audit of IT Systems and Data Analytics

AAA – Nov 2021 – L3 – Q3b – Audit of IT Systems and Data Analytics

Discuss audit team activities using CAATs on client premises and analyze two types of audit software.

Question

You have been appointed as the auditor of a company that processes its accounting functions using a computer system. You have decided to use computer-assisted audit techniques (CAATs) to generate necessary audit evidence for this engagement.

Required:

i. Discuss the activities members of the audit team could perform with their computers in the client’s office. (4 Marks)

ii. Analyze TWO types of audit software in use in computer-based information systems. (4 Marks)

Answer

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Tags: Audit evidence, Audit Software, CAATs, Computer-based audit, Data Analysis, IT Audit
Level: Level 3

Topic: Audit of IT Systems and Data Analytics

AAA – Nov 2021 – L3 – Q3a – Audit of IT Systems and Data Analytics

Discuss solutions to audit trail loss and evaluate CAATs' merits and demerits in auditing.

Question

The availability of Computer Assisted Audit Techniques (CAATs) should be considered by the Auditor when planning the nature, extent, and timing of tests in an audit. Hence, the auditor must determine their testing strategies, which will depend on their decision of either using a Manual Testing method or CAATs method, to avoid loss of audit trail.

Required:

i. Discuss FIVE solutions to loss of audit trail. (5 Marks)

ii. Evaluate the merits and demerits of the application of CAATs. (7 Marks)

Answer

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Tags: Audit trail, CAATs, IT Audit, Manual vs. automated testing, Testing strategies
Level: Level 3

Topic: Audit of IT Systems and Data Analytics

AAA – Nov 2011 – L3 – SAII – Q6 – Audit of IT Systems and Data Analytics

Audit technique where auditor processes data concurrently with client.

Question

When the auditor sets up his own records and processes them at the same time as the client processing data, he is using a technique in computer known as……………….

Answer

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Tags: Audit of IT Systems, Computer Audit Techniques, Parallel Processing
Level: Level 1

Topic: Audit of IT Systems and Data Analytics
Series: NOV 2011

AAA – Nov 2011 – L3 – SAII – Q2 – Audit of IT Systems and Data Analytics

Definition of the system development process in information systems.

Question

Any logical process used by a system analyst to develop an information system, including requirements, validation, training, and user-ownership, is referred to as……………………..

Answer

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Tags: Information Systems, Requirements Validation, System Development, User Ownership
Level: Level 3

Topic: Audit of IT Systems and Data Analytics
Series: NOV 2011

AAA – Nov 2011 – L3 – SA – Q20 – Audit of IT Systems and Data Analytics.

Identifies the documentation that aids in understanding the internal control system.

Question

To obtain an understanding of the internal control system, which ONE of the following computer documentations can assist the auditor?

A. System narrative
B. System flowchart
C. System counts
D. Record layout
E. Programme listing

Answer

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Tags: Audit evidence, Audit Procedures, Documentation, Internal Control, System Flowchart
Level: Level 3