Page 136 - DCOM204_AUDITING_THEORY

Auditing Theory

Notes 7.9 Review Questions

1. Define internal control and internal check. Explain the internal control process with respect
to audit.

2. What are the factors reflected in the control environment?
3. Distinguish between control environment and control procedures.
4. Establish inter-relationship between audit and internal controls.
5. What are the advantages of internal control evaluation?

6. Identify the scope and objectives of the Statutory Auditor and its role in internal control.
7. What are the two dimensions of internal control?
8. Write short notes on:
(a) Internal Control Questionnaire

(b) EDP Environment the New Dimension
(c) Systems Based Audit (SBA)
(d) Systems Control Evaluation

Answers: Self Assessment

1. Chief Audit Executive (CAE)
2. Internal check system

3. Assets against loss
4. This case is appropriate when covering the importance of considering risks associated
with the reliance on information technologies to produce financial statement information.
Generally, this case is best used when the impact of information technology on internal
controls is discussed. This case is most appropriate when discussing IT general controls,
given that IT systems development processes are largely affected by IT general controls.
This case provides an excellent vehicle for highlighting obvious concerns related to IT.
This case is also useful for emphasizing public company auditor considerations of IT
general controls as part of their audits of internal control over financial reporting required
by Section 404 of the Sarbanes-Oxley Act. This case provides an illustration of IT general
control issues that public company auditors may need to consider.

5. Appraisal by workflow; appraisal by duties; appraisal by questionnaire
6. Observations and personal interaction
7. the Systems Control Evaluation

7.10 Further Readings

Books David Coderre, Internal Audit: Efficiency through Automation, John Wiley & Sons,
2009.
Emile Woolf, Moira Hindson, Audit and Accountancy Pitfalls: A Casebook for Practising
Accountants, Lawyers and Insurers, John Wiley & Sons, 2011.

130 LOVELY PROFESSIONAL UNIVERSITY