Topics: Auditing, Audit, Internal audit Pages: 77 (14001 words) Published: October 5, 2014
Information & Information Technology Assurance

Review Questions
1. Which system component is the most business critical and why? The 5 system components are infrastructure, software, procedures, people and information. Even though information is often the result of computer processing, i.e., the end, it is the most important component of a system. Hardware and software are no doubt more complicated than information and usually more expensive. However, the type and extent of hardware and software needed depends on what information the system is intended to process and in turn produce.

2. How would you rank the system assurance criteria for a financial statement audit? For an internal audit?
The assurance criteria are completeness, authorization, accuracy, timeliness, occurrence and efficiency. Financial statement auditors are concerned about completeness, authorization, accuracy and occurrence equally. They are less concerned about timeliness; if timeliness affects the year end, it becomes a completeness issue. Financial statement auditors are not concerned about efficiency. Internal auditors are concerned about all criteria with efficiency the least concerning; this is because it is better to have reliable information that took a lot of effort to get than to have unreliable information that took only a few minutes to get.

3. Computing power doubles annually. How do you think this affects system assurance? This allows organizations to collect, store and analyze more information. While that helps makes business more efficient and far reaching, it increases the risk of privacy intrusion, so the criterion affected is authorization in a potentially negative way. Authorization is also at greater risk as organizations increasingly empower their employees so employees have more direct access to systems and more tools at their disposal. The criteria that are favourably affected are accuracy and timeliness. 4. What are the criteria for assessing system criticality in a bank? A large retailer? A government?

The criteria for business criticality in a corporation addresses mainly profitability (including revenue and expenditure control) and customer service. These apply equally to most industries. On a finer scale, the riskier areas in a bank are credit and cash management. The riskier area in a retail company is supply chain management including inventory. The criteria for a government include safety, health, welfare, revenue and expenditure control. The criteria for a university would include education, faculty support, revenue and expenditure control.


Information & Information Technology Assurance

5. What is the IT implication of International Financial Reporting Standard? IFRS implementation will lead to changes in accounting systems depending on the industry and the extent of computerization in an organization. For example, IFRS does not permit LIFO.

6. How can IT auditors be proactive to help manage risks?
An internal auditor can make recommendations to control deficiencies to help improve controls. The internal audit department should adopt a systems development audit methodology to mirror the organization’s systems development methodology in order to review systems development documentation as it is prepared to identify potential control deficiencies. The internal audit department should also establish a protocol with management to review draft policies and procedures to help ensure that there are adequate internal controls. External auditors’ proactive roles include testing internal controls during the interim audit and bringing control deficiencies to management attention ASAP.

7. What do you see is the role of a computer audit specialist in a financial statement audit? As the general population is more IT literate day by day, so are auditors. Today’s auditors can understand and test some IT controls that, twenty years ago, required computer audit specialists. Meanwhile, IT...
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